Gen-Y are currently facing a huge downsize in being first home owners, dropping from 54% to 34% in last 10 years. The average young Australian between the ages of 25 – 35 years have either made a lifestyle choice and have chosen to keep renting near their place of work or play as they have found that the affordability of buying where they would like to live is just out of their reach or they have chosen to move somewhere they were comfortable with living – even if it is slightly out of the way for family and friends. According to a BankWest study, 86% of Gen Y aspire to be home owners and they are waiting for an opportune time to purchase property in an area close to where they work, currently live and socialise. So what options do we have available to us to make this possible?
First and foremost, the one thing we need to do is plan, prioritise and set some realistic goals.
Saving for a home deposit:
Work with a budget and stick to it. There is no point in trying to save without this. Download a budget planner such as Money Smart Calculator or Good Budget Planner. You will be able to track your expenditure through this and efficiently save for a deposit, go to a bank and acquire a loan.
Parents acting as Mortgage Guarantors
Approach your parents and ask if you are able to use the equity in their home to provide security in a loan against your first home. However, please be warned, this is a huge responsibility for them because if something was to go wrong along the way they would be held responsible and accountable if you are unable to make the repayments.
This option is not as common is Australia as it is in other countries such as the United States, however, in saying this, does not mean you are not able to do it. Simply, you are paying the owner of the house the repayments you would normally pay to the bank with no deposit down. The benefit of this is, you can move in pretty much straight away and make the payments you would normally be paying in rent.