With mortgage debt and property prices at all-time highs, and wage growth at all-time lows, many are stressed and struggling to pay down mortgages.
Almost one in four households is in mortgage stress and do not have enough income to cover mortgage repayments and other living expenses.
For those in that situation, there are some interesting ways to cope with getting a foothold in the housing market.
Interest rates are at all-time lows, but many feel dudded by banks and unable to get access to the best deals.
Mandeep Sodhi, chief executive and founder of HashChing, spoke to The New Daily about the company’s latest GroupBuy product, which he says can help homebuyers shave almost a percentage points off their interest rates, saving up to $80,000 over the life of a loan.
He said HashChing deliberately does not partner with any of the big four banks in an attempt to get the best rates for consumers.
GroupBuy works by allowing people to collectively access the benefits of bulk borrowing. Anyone borrowing more than $500,000 can sign up to ‘books’ on its online platform. Once a book is ‘filled’, or reaches $5 million in value, lenders bid to loan the money.
Then borrowers pick their preferred lender – likely the one offering the lowest rate of interest and, therefore, the cheapest mortgage.
Mr Sodhi told The New Daily: “It will make housing more affordable. It’s better to negotiate as part of a group than an individual.”
Mr Sodhi said that people who sign up to GroupBuy are not required to take out the loan offer as signing on is not a binding commitment
Can’t buy a house? Buy a part
Listed group DomaCom has developed a ‘crowdfunding platform’ that allows people to pool capital to acquire an asset. By buying units in a trust that owns a property, you can take a stake that you can afford, rather than struggling to find something to own 100 per cent.
If you live in the property, you would have to pay rent, but you would be in part paying it to yourself. If you have units amounting to 25 per cent of the trust you would get 25 per cent of the rent.
Up to 50 per cent debt is allowed inside the trust, which means if you buy in, you don’t have to go through the process of a loan application yourself.
DomaCom has a case before the federal court aimed at winning approval for self-managed super funds to buy into its trusts and in turn let the SMSF owner live in the property. It is being challenged by the ATO.
Join forces with others
One option for aspiring homebuyers is to join with friends and family to split the cost of an investment property in the aim of benefitting from the rising tide of house prices.
Charles, 64, invested in a holiday home with his partner and three other families in the mid-2000s. When they sold the home last year, the families came away with a significant boost on the price they paid.
The arrangement suited the families as it allowed them to equally split the use and cost of the property.
He said a cooperative agreement meant the families were able to afford a house they would not have been able to otherwise.
“Because we shared ownership it also meant the house was used regularly,” he said.
“The only downside was that in peak periods like Christmas you couldn’t access the house whenever you wanted.”