Deciding to buy a house is a life changing event.
It is also a huge commitment, and one that you will have to maintain for years to come. Its important to understand that to buy a house, with or without a bank, you will need to be able to demonstrate that you are eligible to do so.
To qualify for a house, you will need to contact the seller of the property you like on this website directly.
Every seller will have their own qualification criteria. Many sellers are just Mum & Dad home owners or property investors who want to sell their property differently. Others are business that do it everyday.
They will want to know certain things about you, your lifestyle and your financial position. For example:
How much do you earn?
How much does your lifestyle cost?
How much savings do you have?
How stable is your job?
What is on your credit file?
You will need to be honest and transparent about this, because giving false information will probably result in losing the opportunity, or worse, losing your home if you aren’t able to make the repayments!
The first question you must ask yourself is “Can I afford to buy a house?”
House repayments are almost always more expensive than rent payments. So if you are earning just enough to cover your food and rent, and there is nothing left over if you switched from rent payments to house repayments, you will probably not be able afford to buy a house.
The solution is to take on a new job at higher pay, a second job, or look to move to a cheaper area where the rents are cheaper.
You can test yourself on a loan affordability calculator from the internet. Otherwise, a good Mortgage Broker may be able to help do the calculation for you. Once you know how much you can afford to borrow, you can look at houses to buy in that price range.
An accountant that understands Vendor Finance should be able to assist you with your budget. You may find a suitable accountant here.
I’m on Centrelink payments or a pension, can I buy a house?
Centrelink benefits are usually enough to cover minimal living costs only, but not enough to buy a house. There are a exceptions, such as military pensions.
If you want to buy a house and you rely on Centrelink payments, you must have extra income from a job, a spouse or other source..
Paying off a house can take 20-30 years, so if your benefits will only last a few years, how will you continue to make the repayments? A good Mortgage Broker may be able to help.
I have bad credit, what do I need to do?
The beauty of buying without a bank at the start is that you have the time and opportunity to fix your bad credit status, before you need to take out a bank loan to pay out the vendor finance on your home.
The seller will want to see your Credit File at the start because they must be confident that you will be able to go through with the home purchase. Be aware that with Rent to Buy, and some Installment Sales you will need to get a bank loan after a given period to complete the purchase of your home. So if by then you have not fixed your Credit File, or have made it worse, you could end up losing your home!
You make your Credit File worse by getting new credit cards, quitting your job and starting up a business, getting a car loan or personal loan – any of which will affect your Credit File and your chances of getting a bank loan.
There are a number of Credit Repair companies that help you fix your Credit File. You may find a suitable Credit Repair company here.
What if I don’t have enough savings or deposit to qualify, can I buy a house?
The way most of the banks look at it, they require genuine savings for a 10% deposit if the buyer has a full time job, or a 20% deposit if the buyer is self-employed. Some sellers with vendor finance houses accept less than a normal deposit at the start, but will need to be convinced that you are serious about buying and able to save enough money to qualify for a bank loan in the future.