Alternative ways to get on to the property ladder

Written by in Buying on December 15, 2011

Alternative ways to get on to the property ladder

In a market where the cost of buying a home continues to trend upwards, the great Australian dream is becoming impossible for many to get on to the property ladder.

According to Rich Harvey, CEO of, one of Sydney’s leading buyer advocacies, “current market conditions are making it difficult for many to get onto the property ladder. As a result, looking for alternative ways to get into your first home may be a perfect solution for many who are just starting out and unable to do so, on their own.”

“When buying property, it is important to identify what works for you and your finances and set yourself long term strategic goals and if an alternative method of getting on the property ladder will help you achieve your long term goals, you should consider it.” says Mr. Harvey.


Alternative Ways to Get on to the property ladder

Mr. Harvey states, “One option many people do not consider, but should, is improving their skill base and hence increasing their wage. This allows the possibility of saving for a deposit or having the ability to pay mortgage repayments.” He continues, “Education, short courses or self study are options that many do not consider unfortunately, however, they are sure to make a difference.”

But if increasing your salary is not an option, what are the other alternatives?


1. Shared Ownership

Purchasing a property with family members or friends is one alternative to consider when trying to get your foot in the door.

Buying a property with another party can provide a significant upside as the burden is spread across two parties. Shared ownership will enable both parties to save for a deposit in a shorter amount of time and allow you to take out a lower mortgage for your portion of the property.

However, you must take care and ensure that both parties’ interests are protected. Mr. Harvey advises to “ensure you get along with the person you intend to purchase with, as well as establish a written agreement stating the aims and intentions of those involved. This will help you to avoid and solve any complications in the future such as disagreements on when to sell the property and / or paying each other out.”


2. Parental Assistance

The help of parents and other family members can be vital when attempting to get on to the property ladder. Your family may be able to assist with the initial deposit or with repayments during the first few years of your loan. This option may relieve short term financial stress and frustration felt when trying to go it alone.

“This alternative is ideal to start off with” says Mr. Harvey, “however it can make buyers a little lazy as it does not teach you to stand on your own two feet. That being said, in difficult times this is a great option.”


3. Buy to Invest

“Buying a property as an investment rather than an owner occupier is another alternative way to get on to the property ladder”, says Mr. Harvey. Although you still need a deposit, once the property is occupied by a tenant, they will make constant contributions towards your mortgage via regular rental payments. However, this option may only be viable if you are currently living with family or friends rent free. Otherwise, you will have to cover the shortfall in mortgage repayments as well as pay your own rent.


4. Rent to Buy

‘Rent to Buy’ is a leasing scheme which allows the rental of a property for an agreed period of time. At the end of this period you will be presented with the opportunity to purchase the property.

‘Rent to Buy’ schemes offer the ability to move in without the substantial upfront costs. It also provides an agreement on the final purchase price of the property. Thus if you decide to purchase the property at the end of the lease period, the price you will pay is set. If you no longer wish to ‘rent to buy’ the property, you can walk away from the agreement with only a few months notice and no further commitments.

“The big advantage of this option is that you can get into your own home, without saving up a substantial deposit. However, you must be careful not to fall behind in rent and any other payments as you may lose the option to buy at the end of the lease,” warns Mr. Harvey.