• You have great income but you don't quite have enough
deposit to buy a property immediately, or
• You have a deposit, however you'd like to provide a bigger
deposit to avoid costly Lender's Mortgage Insurance
• You'd like to keep some of your own funds as "reserve" to look after repairs or other improvements.
• You're an investor who wants to use as little of your own money as possible
(i.e. increase your overall LVR).
• You’re an investor wanting additional options to address the new
APRA lending restrictions so you can keep growing your portfolio.
• For people wanting to use our money to help you buy your property.
Click HERE To Download THE DEPOSIT LAYBY™ FOR BUYERS Info Booklet.
The Deposit Layby™ lets you buy the property NOW, and pay off the deposit later (while you’re living in the home you already own).
Legal title transfers to you immediately (i.e. you legally own the property from day one).
This means you can get ahead of the property cycle and secure a property NOW; instead of having to wait; losing countless thousands of dollars in wasted "dead rent" while you try to save a larger deposit.
The Deposit Layby™ lets you break free of the "Rent Trap". (explained further on this page)
Many think a "deposit" is simply the difference between the purchase price, and the amount of money a primary lender will lend you.
Although this sounds reasonable, saving that amount ONLY (as a "deposit") will not be enough to let you buy your chosen home.
As an example, if the purchase price was $500,000, and bank was prepared to lend you $450,000, some would say they need a $50,000 deposit to purchase the home.
($500,000 purchase price - $450,000 bank funding = $50,000 balance remaining).
However, the purchase price and the COST of buying the home are two different figures.
The reality is it's more expensive than you think when you purchase a property.
Not only do you need to pay the Purchase Price (i.e. the selling price), you also need to pay stamp duty, legal fees, borrowing costs, due diligence, moving and other costs.
Therefore the COST of the home is actually the Purchase Price PLUS the other expenses incurred when you buy the home.
In the situation where the Seller agreed to sell you their home for $500,000, it may actually COST you $525,000 by the time you pay all of the other purchasing fees and charges.
This means if a lender is only prepared to lend you $450,000, and the total COST of buying the home is $525,000 you need to find $75,000 of your own money (not $50,000) if you want to purchase the home.
For this reason, we consider the "deposit" to be the amount of money you need to fund the "gap" between the COST of buying the home and the amount the primary lender will give you.
At settlement, all of this money needs to be paid by someone, but that someone doesn't need to be YOU!
The Housing Heroes Deposit Layby™ program can help you fund the "gap" which lets you purchase a home sooner; rather than staying trapped in the "Rent Trap" while trying to save enough "deposit" to cover the gap in funding.
Having to continue renting while you try to save that extra $25,000 could take a significant amount of time. THAT is the Rent Trap !
You’re renting and you’re sick of it. You decide you want to buy a house. It's time to take action.
You have a little bit of money saved, however you don't think it's enough to use as a deposit to buy a home immediately.
You look at houses on the market (at today's prices) and decide you want to buy a particular type of house. In today's market it’s worth "$X".
You know you'll need a deposit but you're not quite sure how much you'll need. You decide 5% of "$X" is a good place to start.
While you’re trying to save that "magic number" (5% of “$X”) as your deposit, you pay a landlord tens of thousands of dollars every year in dead rent.
The landlord uses your money to pay off the rental house that belongs to them.
(If you pay $400/week in rent, you’re paying $20,000 every year of your own income/money to help the landlord pay off their house).
It takes time (sometimes a lot of time) to save the "magic number".
Unfortunately, history has shown that with time, the prices of property tend to increase.
So time passes, you've been disciplined and saved diligently. You've finally saved the "magic number" (5% of “$X”) and you think you’re ready to buy a house.
If the house prices haven't moved during the period you were renting & saving your deposit, BINGO, you’re ready and able to buy the same house at the same price.
However, if the house prices have increased during that period, you now have a problem.
The deposit you saved (5% of “$X”) is no longer enough to buy that house. That house isn't worth "$X" any more, it's now worth "$Y" and you'll have to pay the difference.
Chances are you might not be able to buy that house, even after wasting all of that rent money and saving diligently.
You might still be "locked out" of the home buying market and you may need to continue renting (for even longer) to keep building the deposit required to meet the future price of your chosen house (whatever that might be) when you're finally ready and able.
SO, it's back on the RENT TRAP while you continue to save.
For many renters, this cycle simply doesn't stop and some NEVER get to purchase a home!
For those that do break free, they not only pay tens of thousands in unnecessary dead rent while they’re trying to save their deposit (with whatever money is left over after paying all of their other bills), they end up paying significantly more for the very same house.
If a Buyer takes advantage of the Deposit Layby™ now, purchases the home now, and converts the "dead rent" money into house repayments, any capital appreciation the house experiences would belong to THEM.
They’ll own that growth!
Put simply, if they buy a property NOW, they own the growth and their personal wealth increases as the house values continue to increase.
If they wait, they have to pay someone else for that same growth, increasing the wealth of the person they buy it from.
Lender's Mortgage Insurance (LMI) can be a massive "dead cost" to you as a buyer. It can add many thousands to the actual real cost of buying your property.
Lender's Mortgage Insurance protects the bank; not you.
You (as the borrower) have to pay the premium, but it protects the bank.
Most banks will charge you LMI if they’re lending more than 80% of the value of the property.
If you borrow less than 80% from the primary lender, most primary lenders won't require Lender's Mortgage Insurance so there’s no LMI premium payable by you.
This saves you money so the associated costs of purchasing the property are significantly less.
Avoiding Lender’s Mortgage Insurers also means the primary lender (i.e. your bank) is the only party making the decision about approving your loan.
If you need the Lender’s Mortgage Insurer to be involved in the loan approval process, the bank may say Yes and the Mortgage Insurer may say No.
If the Mortgage Insurer says No, the deal is dead in the water and you simply won’t be able to buy (without extra assistance from someone else).
If you can borrow “Top-Up” Deposit Funds from someone (family, friends, or Housing Heroes), you can avoid having to pay Lender's Mortgage Insurance.
Plus, you can remove one of the barriers to securing the finance; as the Mortgage Insurer won’t be involved in the decision.
At the very least, the LMI premium you pay will be less with a lower LVR (Loan-to-Value-Ratio).
For example, you might be in a situation where you've saved say 15% of the purchase price.
Because the primary lender will need to lend you more than 80%, you will have to pay LMI; adding thousands to the purchase price of your home.
However if you could "borrow" another 5% from somewhere else (i.e. from Housing Heroes using the Deposit Layby™), that might let you borrow less than 80% from the primary lender and therefore save you thousands by not having to pay the LMI.
Housing Heroes Deposit Layby™ lets you do just that!
(Keep in mind, the figures used above are for illustrative purposes only to explain the concept. Additional fees, charges and expenses like Stamp Duty, legal fees, borrowing costs, due diligence and other costs all need to be paid which are on top of the purchase price. That said, the Deposit Layby™ program can also be used to help offset these costs as well).
All of the purchasing costs (purchase price + associated purchasing expenses) need to be paid by someone at settlement, but that someone doesn't need to be YOU!
Yes, you have to pay the Seller the purchase price, however you don't have to use all of your own personal money to pay them.
Traditionally, the Seller receives some money from you (i.e. your deposit), and your primary lender (your bank) uses their money to pay the rest; the primary lender gives you a loan.
You then pay that loan back to the primary lender over 30 years.
Likewise, the additional costs of stamp duty, legal fees, borrowing costs etc... all need to be paid by someone, but that someone doesn't have to be you.
Whether you use your own money, or someone else’s money, it doesn't matter. As long as they all get paid.
Rather than use your own funds to pay all of these expenses, you may prefer to keep some cash "in reserve" so you can do renovations or make improvements to the property after settlement.
You may even want to use the Deposit Layby™ money to buy new furniture when you move in.
Some investors like to purchase property using as little of their own money as possible.
They believe it gives them a better "cash-on-cash" return.
The less of their own money they use, the more they have available for other investment opportunities.
As Housing Heroes is not licenced to give investment recommendations or advice, any investors wishing to consider or pursue the Deposit Layby™ facility as an investment strategy should discuss the suitability of the product with their financial advisor before purchasing properties.
The Housing Heroes Deposit Layby™ facility could be utilised by you to help pay the "gap" (all of the expenses incurred that the primary lender won't pay) which leaves more of your own money in your own pocket.
What you do with that extra money is up to you!
To find which properties are available under the Deposit Layby™, do the following:
• Select the "AVAILABLE PROPERTIES" from the top menu bar.
• Select the "Deposit Layby™" option from the "Sort By What You Can Do" options at the
top of the page.
Housing Heroes owns the Registered Trademark to the Live-In Layby™
program (of which the Deposit Layby™ is an integral component).
This means no other real estate agency can offer this program!
To Download a copy of the Home Buyer Information Kit, Click HERE
Housing Heroes Pty. Ltd. ATF Housing Heroes (ABN 53 799 748 374) trading as Housing Heroes. Australian Credit License 443249