To all those Gen Yers and Millennials out there, learn from those of us from a different generation who wish we’d entered the property market sooner.
Mum & Dad got it wrong. We should have saved more and spent less on nights out and dodgy 80s fashion. We don’t regret those fabulous backpacking experiences when Google meant nothing and Lovely Planet guides meant everything but it’s frustrating to think of all that money spent on rent that could have been going into a mortgage instead.
For the under 30s, the hipster beard has taken over so there’s a little grooming/haircut money being saved. But it’s time to ditch those expensive coffees, regular Uber trips and fine dining experiences and start saving. It’s boring, I know coming from an oldie but the spending needs to stop. You’re really excelling at it…
It’s predictable sure but savings are the key to getting into the property market. Becoming a great little saver doesn’t have to mean a lifetime of noodles, rice and no social life.
Do your research on the best bank accounts – those with high interest rates (often fixed term), rewards for deposits and with no or low penalties for withdrawals. Have money regularly deposited directly into that high-interest account (a percentage of your pay perhaps?) so you’re not tempted to spend it and be sure that any ‘extras’ such as tax returns, money gifted or work bonuses are paid into that account too.
It’s so very thoughtful of you to be helping someone else pay off their mortgage but IT MAKES NO SENSE! Forget the landlord, donate your hard-earnt pennies to you.
If you are having to rent (i.e. living with family/friend and paying reduced or no rent is not an option) consider the more affordable option of shared housing to keep your rental and utility costs down. Keep your eye on the prize even through the most frustrating of housemates (won’t shop, clean, put the toilet seat down, pass the remote control).
Focus on your savings and those long-term benefits of owning your own home.
One 2016 surveyi revealed that 25% of Gen Yers sought help from their parents. And it wasn’t just small change. The average amount contributed by parents for a home deposit was $80,000. If your parents aren’t in a position to assist you financially, they may consider co-signing your home loan as guarantors.
Ok, so what you can afford isn’t where you want to live. Depending on your budget, your first home may be an investment. Many younger people stepping into the market for the first time buy in outer suburbs and opt to rent out their property; ‘rentvesting’. The goal is to build up a healthy deposit through the rental income from that initial investment in order to then purchase something more suitable long-term. Over time, properties gain value and as a result, rental prices rise. Once again, it’s a big picture approach by holding onto a property until it can generate a solid income to support your next property purchase.
With travel and a mortgage, it doesn’t have to be one or the other. You can tick both boxes. Again, do your research and be sure you’re buying in an area where there is enough demand on rental properties so that should you wish to travel, someone else can be paying the mortgage while you’re away. Another option is to look into how viable your property might be on Airbnb?
It goes without saying (but I’ll say it anyway) that there is much help at hand available to those venturing into the mortgage world. At Invest Blue, we have trusty home loan specialists to help guide you through what can be a daunting process, at any age. But take heart in knowing that the majority of first home buyers are taking just under four years to save for a home loan deposit.
Ready to take the leap? Here’s our 9 top tips for first home buyers.
[i] 2016 Survey from Digital Financial Analytics
We credit the following article as the original source from which this article was developed
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