WEALTH HUB JOURNAL

Purchasing Property as an ADF Member: 6 Mistakes to Avoid

For members of the Defence Force, special subsidies and other forms of home ownership assistance can make it easier to purchase real estate. However, some common mistakes can cause you to lose money or prevent you from fully making your entitlements work for you.

Let’s look at 6 mistakes to avoid when buying and investing in real estate as a member of the military.

1. Jumping on subsidies without careful consideration

While all subsidies offered to ADF members can make it easier to purchase a home, the right entitlement for you depends on your current financial situation and your investment objectives. By choosing the right subsidies, you can maximise your savings and make your entitlements work for you.

Before taking subsidies like Defence Housing Australia (DHA) or the Defence Home Ownership Assistance Scheme (DHOAS), consider what’s best for your long-term goals.

2. Forgetting that rental allowance can make it harder to get a loan

As a member of the ADF, the Australian government partially subsidises your rent.
If you’re looking to buy a real estate property, it’s important to understand that your lender will assess your borrowing capacity based on the total monthly rent — not just the portion you’re responsible for paying after you subtract the subsidy.
This can mean denial for a loan even if your subsidy would allow you to make the repayments. So keep that in mind when you decide to accept the DHOAS.

3. Opting for DHOAS when a standard home loan may be better

DHOAS is an incredibly helpful home ownership subsidy for many Australians. However, it narrows your options when it comes to finding a lender and increases your interest rate.
Carefully consider the current rate for a standard home loan, as that may be a better option for you rather than jumping on the DHOAS.

4. Missing out on DHA properties

Living in a Defence Housing Australia (DHA) property can significantly reduce your monthly spend on rent. While DHA isn’t always the best option, it can free you to direct more of your finances toward investing in other properties.
Since you’re spending less on housing, your lender will likely approve you for larger loans. With a higher borrowing capacity, you greatly increase your options when it comes to purchasing property.

5. Not leveraging your deployment money

Your deployment money is well-deserved, and you definitely should use some of it to celebrate coming home. However, this financial boost can greatly accelerate your property investment goals.
If you leverage this money smartly, you can purchase your next property much sooner than you think. While the average down payment for a home in Australia is around $100,000, it’s possible to secure a property with roughly half of that.

6. Going it alone without the help of financial professionals

At Wealth Hub Australia, we help everyday Australians reach their financial goals, build wealth, and achieve financial independence. We will help you navigate the complicated tax landscape, find the best properties for your objectives, and make the most of the entitlements you deserve as an ADF member.

Contact Wealth Hub Australia today.

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