Property partners: Savvy ways that buyers can get a top up for their home loan

Start ups and switched-on buyers are overcoming the deposit barrier with alternative ways to get into their own door sooner.

The hurdles to homeownership are becoming more challenging and the greatest obstacle for many is the hefty deposit.

While some buyers can lean on the bank of mum and dad or tap into co-contribution schemes to get through their own door sooner, not everyone has cashed-up families or meets government requirements.

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As a result, savvy start ups and switched on buyers are overcoming the deposit barrier by opting for co-ownership with friends or family, or even with strangers through buyer matchmaking services.

But now there is another way to get a “leg up” on the ladder for those who want a property partner, without the relationship.

Under the new Bricklet Homebuyer scheme purchasers can buy into High Society in Belconnen in Canberra, where apartment prices start at $654,900. Picture: Supplied

Bricklet, a fractional property investment company, has recently launched Bricklet Homeowner to give struggling buyers a financial “top up”.

This alternative pathway means purchasers can avoid the wait of saving up the traditional 20 per cent usually required of new homeowners.

Through Bricklet Homeowner — a buyer enters into a typical mortgage but a third party steps in with an additional sum to be paid off as “rent” on top of home loan repayments.

For example, a buyer looking to get into a $700,000 home can put down $20,000, and with a 4 per cent loan will pay monthly mortgage repayments of $3061 plus a rent component of $872 – a total of $3933 a month.

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Without the top up scheme, total home loan repayments would only be $3265 however the 20 per cent deposit would be a more significant $140,000 upfront cost.

Darren Younger, Bricklet CEO, said the setup works much like co-ownership structures, however the investor – currently Tavinu Capital with more set to join – is already on board.

“What we’re doing is enabling people to get a mortgage for their home and then rent the remaining piece from an investor,” he said.

Darren Younger, CEO of Bricklet said alternative schemes are needed to help buyer who "qualify out" of government initiatives. Picture: Supplied

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“It’s really exciting there are now a variety of opportunities for homebuyers but it really comes down to how you want to do it, or what you actually qualify for.

“One of the main reasons we created this was because a lot of people get qualified out of government schemes. They either earn a bit too much, have already owned before, don’t meet the price cap or just miss out because spots are limited.”

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Currently in its initial phase, Bricklet Homebuyer is restricted to newly constructed homes, but Mr Younger said existing homes will be an option by early 2023.

“This is a chance to get into a home you don’t yet have enough money to buy. You get all the benefits of living in the home, and all the gains from price growth of your share of the house,” he said.

Sydney apartments in Burwood’s Adela can be bought using the "top up" scheme. Units in the development start at $1.08 million. Picture: Supplied

If a homebuyer owns 80 per cent they will walk away with 80 per cent of the capital gains while the investor takes 20 per cent.

“And you have total flexibility to buy out the co-owners at any time. Rather than waiting 10 years to build up a deposit for your dream home, you can buy it now with the help of co-owners.”

Househunter Vidya Devdas and her husband, who are looking to buy a home in Parramatta, fear they will be priced out without additional help.

“We’ve been trying to get into the property market for so long, and it was getting too hard to even think about it,” Mrs Devdas said.

A lot of young families think if they can’t make up the initial deposit, then what hope do they have? You worry whether you will ever be able to own your own home one day.”

Located in Armadale in Melbourne, this block of apartments is also part of the Bricklet buy up. Picture: Supplied

She added that they currently rent in Westmead, and don’t want to move out of their neighbourhood.

“If you really like the area, why would you want to move if you have an option? We have kids. One is already in school and the other is starting school next year. With primary and high schools nearby, we would not want to leave the area because we are already settled in,” she said.

Vidya Devdas is looking to use Bricklets to get onto the property ladder. Picture: Supplied

The couple, who both work in IT, are looking to buy a two-bedroom apartment with parking.

“If you don’t have the deposit, the banks say don’t even think about going any further with your property dream. But Bricklet helps you get your hands on your first property sooner. At least we will be paying towards our own home, even if we are also paying rent. We think it is achievable to pay that extra loan off early.”

Steve Mickenbecker, Canstar group executive and finance commentator, said alternative ways of getting into property can be a great kickstart for some struggling buyers, but stressed that borrowers should do their homework.

Units in this Parramatta block on Phillip St can be bought from $805,000 and purchased with the Bricklet program. Picture: Supplied

“The thing I like about these types of programs is they’re genuine attempts to deal with the problem of putting together a deposit, which has been the major problem for first-time buyers to date,” he said.

“What these programs do is plug that gap so people can get into their loan and home sooner.”

“But in doing that, it also means a homeowner is giving away part of the upside of owning property. If the price goes up, they don’t get all the growth.

“However, they’ve got into a property they might otherwise have had to wait years for. You have to weigh up the pros and cons.”

Steve Mickenbecker, Canstar group executive said struggling buyers should always do their home buying homework. Picture: Supplied

Mr Mickenbecker said such schemes could also limit a borrowers choice of lender or lending product given that it is not a “typical” mortgage scenario.

“Some banks might not be as keen on these types of arrangements so you might be locked into the loan until the arrangement is unwound,” he said.

According to Mr Mickenbecker, the ideal candidate for such arrangements would be buyers who don’t have a deposit, but have solid income.

“This particular solution solves the deposit problem, but not the repayment problem and with rising rates that is becoming more of an issue today,” he said.

Originally published as Property partners: Savvy ways that buyers can get a top up for their home loan