Barefoot Investor Scott Pape warns Aussies against buying house with just a two ... trends now

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Barefoot Investor Scott Pape has warned Aussies to think twice before buying a house with just a two per cent deposit. 

He revealed a letter from a woman who managed to buy a unit as a single mum on a low income who is also a carer and sending money to a parent living overseas.

Jane said she had put down a two per cent deposit when interest rates were low with help from the then-Coalition government's First Home Loan Deposit Scheme.

But now her fixed rate is about to run out, her mortgage is about to triple, she's 'terrified' and wants advice on switching banks to keep her costs down. 

Mr Pape was blunt in his answer, saying 'Jane has about as much chance of moving banks as Peter Dutton has of being Prime Minister'.

'She pretty much had zero equity in the joint to begin with, and it went down from there,' he said.

'So not only is she deeply in the red but, more importantly, her interest rate is about to triple, and her repayments could take food off her table.'

Jane had admitted in her email to him that she had gone 'against what you recommended' because 'the government said they were helping me buy a unit'.

Mr Pape said her mistake was to put her faith in politicians.

'I don't blame her for wanting to buy her home,' he said.

'The problem is she trusted that the politicians were acting in her best interest, not theirs.'

Mr Pape said he had put Jane in contact with a financial counsellor who will work with her and her bank to try and find a way forward.

'But it won't be easy,' he said, adding that only having a two per cent deposit is not his cut off line by any stretch.

'I believe that if you can save only a five per cent deposit … then you really can't afford a house.'

RBA Governor Philip Lowe has also left open the possibility of another rate rise, after this month raising

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