8 Tips to Help Break the Rent Cycle


Many first home buyers find it extremely difficult to save for a home deposit at the same time as renting. Check out the following 8 tips which will help you get out of the rent cycle, and into your own home sooner.

  1. Never fall behind on rent

Many lenders these days will consider your rental repayments as “genuine savings” in lieu of having a large deposit you’ve accumulated. Lenders essentially believe that paying rent consistently bodes well for when renters eventually buy,  and have to make mortgage repayments. However, if you fall behind on rent and or pay it late, lenders also believe this indicates that you’ll be a higher risk customer and won’t accept the rental payments as genuine savings.


  1. Save smartly.
    Figure out the difference between your rent and your estimated mortgage repayments, and save that amount. When approaching a bank for a loan, it helps to be able to point to a consistent pattern of savings, ideally in excess of what your mortgage repayments would be. This gives a lender confidence that you’re going to be able to afford your repayments comfortably without putting any strain on your lifestyle or finances.


  1. Cut down on your expenses
    A little different from the above point, go through your transaction accounts and see if all your expenses are absolutely necessary. Do you have any subscriptions you no longer use, have you reviewed the services you use (internet, phone, gas, power etc) to see if you can be getting a better deal. Every little bit counts when saving, and it helps to be able to show a potential lender for your home loan that you’re financially responsible and know how to manage your money.


  1. Consider the first home owner grant
    As a first home buyer, you may be able to take advantage of the first home owners grant. As it only pertains to certain types of properties, whether you decide to or not will be personal preference, and one that you’ll want to explore fully.


  1. Check what stamp duty, if any, will be payable.
    At the time of writing, first home buyers in QLD don’t have to pay any stamp duty provided the purchase price of their property is under $500K. However, there are many factors which can affect your eligibility for a stamp duty exemption, and you’ll need to speak with an expert to determine whether you’ll have to pay stamp duty on your purchase.


  1. Consider paying out some debts
    You don’t necessarily have to be debt free when you purchase a home, but in some instances it may be preferable to pay off other debts before you make an offer on a property. Your mortgage broker will help you understand if you need to pay off any debts before breaking the rent cycle, and in which order they should ideally be paid off.


  1. Look at all your loan options.
    Do you know which lenders are best for first home buyers? Have you considered having someone act as a guarantor for your first property? Do you know which lenders will allow for a lower deposit? All of these considerations, and many more, lead to the next point:


  1. Speak with a mortgage broker
    A decent broker will be able to help you formulate a strategy to escape the rent cycle. They can give you advice on how much of a deposit you need, and which lenders will be best placed to approve your home loan application. Mortgage brokers can also explain the whole process of buying, from making an offer on a property, all the way through to settlement. They act in partnership with you to help you break the rent cycle, and get into your own property sooner.



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