Perth's property market has many first home buyers thinking outside the box when it comes to buying their first home. One option that's gaining popularity is purchasing a granny flat as your initial step onto the property ladder. Let's explore how this could work for you and what financing options are available through experienced mortgage brokers.
What is a granny flat purchase?
A granny flat, also known as a secondary dwelling, is a self-contained living space that sits on the same property as a main house. When buying a granny flat as your first home, you're typically purchasing the entire property - both the main house and the granny flat - then choosing to live in the smaller dwelling.
This approach can offer several benefits:
• Lower living costs while you build equity
• Rental income from the main house to help with mortgage repayments
• A stepping stone to eventually moving into the larger home
• Access to first time home buyer programs and grants
Understanding your loan options
When applying for a home loan to purchase a property with a granny flat, mortgage brokers can help you access home loan options from banks and lenders across Australia. The loan structure might be more complex than a standard home purchase, so working with professionals who understand the application process is valuable.
Key considerations include:
• Loan amount: Based on your borrowing capacity and the property's total value
• Interest rate: Both variable interest rate and fixed interest rate options are available
• Loan to value ratio (LVR): This affects whether you'll need lenders mortgage insurance (LMI)
• Investment components: If you plan to rent out the main house, investment loan options may apply
First home buyer benefits in Western Australia
Perth first home buyers can access several government programs when purchasing a granny flat property:
First Home Owner Grant (FHOG)
The FHOG provides financial assistance for eligible first home buyers. The grant amount varies based on whether you're building or buying an existing home.
Stamp duty concessions
Western Australia offers stamp duty reductions or exemptions for first home buyers, depending on the property's value and your circumstances.
Home Guarantee Scheme
This federal program helps eligible first time home buyer programs participants purchase with a smaller deposit, potentially avoiding LMI costs.
Getting pre-approved for your granny flat purchase
Before you start property hunting, it's wise to get pre-approved for your home loan. This streamlined application process involves:
- Financial assessment: Review your financial situation, including income, expenses, and existing debts
- Documentation: Gather bank statements, payslips, and other required documents
- Borrowing capacity calculation: Determine how much you can borrow
- Interest rate options: Compare different packages and interest rate discounts available
Having pre-approval gives you confidence when making offers and shows sellers you're serious about buying.
Investment loan considerations
If you plan to rent out the main house while living in the granny flat, part of your loan may be classified as an investment loan. This affects:
• Tax deductions available
• Interest rates applied
• Loan serviceability requirements
• Documentation needed for your investment loan application
Mortgage brokers with access to banks and lenders nationwide can help structure your loan appropriately for your situation.
Making your granny flat strategy work
To maximise the benefits of buying a granny flat as your first home:
Consider an offset account
This can help reduce interest costs on your home loan while providing flexibility with your savings.
Plan for the future
Think about whether you'll eventually move into the main house or sell and upgrade to a different first investment property.
Understand rental yields
Research rental demand in your chosen Perth suburb to ensure reliable income from the main dwelling.
Factor in all costs
Beyond the purchase price, consider:
• Ongoing maintenance for both dwellings
• Property management costs if needed
• Insurance requirements
• Council rates and water rates
Working with mortgage brokers
Given the complexity of financing a granny flat purchase, partnering with experienced home finance & mortgage broker professionals makes sense. They can:
• Access multiple lenders to find suitable loan products
• Help structure your financing optimally
• Guide you through first time home buyer schemes
• Assist with the investment loan application process if applicable
• Provide ongoing support throughout your home buying journey
At G&T Finance, we understand Perth's property market and the unique challenges first home buyers face. Our team has access to numerous lenders and can help you explore all available options for your granny flat purchase.
Whether you're looking at this as a stepping stone to homeownership or a long-term investment strategy, we'll work with you to find financing solutions that match your goals and financial situation.
Call one of our team or book an appointment at a time that works for you. Let's discuss how a granny flat purchase could be the perfect start to your property journey in Perth.
