How you can get a home for free

PHOTO: Ever wished you could get a home with no money? There might be some options.

One of Australians’ most googled questions about property is how to buy a home with no money. It sounds crazy, but there are ways to make it happen.

One of Australians’ most searched questions about property online is how to buy a home with no money.

It might sound completely crazy, but the revelation from Google Trends isn’t entirely out of the realm of possibility.

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A host of market, mortgage and legal experts have revealed the various ways it can be done, why you might be better off just saving a deposit and how to keep costs down if you do buy the normal way.

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A HOME WITH NO MONEY

Mortgage Choice broker James Algar might have some surprising news for people with a decent paying job, but no savings to their name.

“You can buy a home with no money at all, but you will need a guarantor,” Mr Algar said.

He said that every month he had one or two customers who had no savings, but a parent or family member willing to guarantee a loan at 100 per cent.

Know any well-off family members who might guarantee your loan?

Typically banks will look for a blood relative for such an arrangement, but that could be a sibling, aunt, uncle or grandparent.

“It doesn’t always make the most sense, so get some advice — but there are many situations where someone can buy a home with no deposit at all.”

But it’s worth noting that this approach will mean more significant mortgage repayments, which with interest rates rising, could be a concern for both the mortgage holder and the guarantor.

An incredibly rare route could see you claim a title without even paying a mortgage — but might come with legal ramifications.

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Madgwicks property law team associate Beth Visser said the controversial adverse possession legal doctrine allowed “someone to claim ownership of another’s land without compensation”.

“If you succeed with the claim it means the original owner’s title is extinguished and the adverse possessor becomes the owner,” Ms Visser said.

Typically claims are only made in the context of slivers of land owing to a fence-line moving or a surveyor error relating to a property boundary.

“It’s extremely rare for a whole parcel of land,” Ms Visser said.

There are reasons for that.

The kind of home the owner won’t notice you’ve moved into for 12-15 years might not be one you’re keen to spend that long in.

To make a claim you must take steps to possess the land for a lengthy period, 12 years in NSW and Queensland, 15 years in Victoria and South Australia — but these timelines can be extended in some situations.

“And if the owner gets wind of it and wanted to recover possession, before a claim succeeded, they might be able to charge you with trespass,” Ms Visser warned.

She added that it can also be hard to prove a claim, and there could be “significant expense” in the process — especially if you needed to go through the courts, though this would be far less than the cost of an actual house.

Real Estate Buyers Agent’s Association of Australia learning and development co-ordinator Lisa Parker said the most common way to get a home with no money arguably had the steepest cost: inheriting one from a deceased loved one.

Some parents are sharing their inheritance before they pass away.

But with a rising number of parents now making part of their inheritance available to their kids before they died, she said it wasn’t infeasible to get a home without a death in the family.

And even if it’s not a full home, a large cash injection could reduce the total cost of a home dramatically.

A HOME WITH ALMOST NO MONEY

Mr Algar added those with only a bit of money in the bank might also still be able to buy a home without taking years to build a 20 per cent deposit through savings or equity.

He said that if you had reliable income and a modest amount in savings federal government schemes, such as the Family Home Guarantee, meant a buyer might need as little as 2 per cent of a deposit to get a home.

Government support programs can drastically cut back how much money you need saved to buy a home.

First-home buyers using the same scheme, that has the Commonwealth guarantee a loan without the need for expensive lenders mortgage insurance, can join in with a 5 per cent deposit — and in many states could pay reduced or no stamp duty.

But Mr Algar said even with a recent increase in caps on the federal programs it would provide limited support in expensive cities such as Sydney and Melbourne, though could be helpful for regional, Adelaide and Brisbane-based buyers.

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Mr Algar added that co-ownership schemes, such as an Australian Labor Party proposal to take an up to 40 per cent stake in a home could drastically reduce the upfront cost of buying.

But in Victoria, where a similar scheme already operates, buyers face heavy restrictions including a list of approved suburbs, as well as income and home price caps.

Even if taking help from the government, make sure you read the fine print.

To truly own the home eventually you would also have to pay out the government — not just your mortgage, Mr Algar said.

Other state-based programs might also provide assistance for first-home buyers, especially if a buyer was open to a new build or off-the-plan options.

GETTING A DISCOUNT

Ms Parker noted that while you would still need to have a deposit and regular employment, tradies and those who were handy with a set of tools could also look for “less desirable homes that are in disrepair” to keep upfront costs down.

“Buyers could also go for a property that’s not as well sought by the general population in a location,” Ms Parker suggested.