Owning your own home before you’re thirty
Gen-Y rolls their eyes when their parents – who benefited from low house prices and rising wages in their youth – scold them for not venturing into the real estate market during their 20s and 30s. Just because it’s harder now than it was before doesn’t make owning your own home by the time you turn 30 impossible. You can own the home you want before you blow the candles on your 30th birthday cake. Here’s some tips to make that lofty dream a solid reality.
Think about investment, not owning your own home
Owning your own home by age 30 requires a bit of entrepreneurship on your part. The first property you buy may not necessarily be the first you live in. Your first property could be an investment property. Some Gen Y people are choosing to buy modestly priced homes in outer suburbs and saving for a deposit through collecting rent.
Though many investments do not turn a profit immediately, they do produce a return over a few years or two. As house prices rise, so does rent. Once your investment starts generating a solid income, you can put the proceeds towards a deposit and eventually, your second mortgage.
Saving is still the key to owning your own by 30
Sceptics say Gen Y is too addicted to travel and their weekly “smashed avo” to save anything from their work. Saving money is the first step towards buying into the property market, and there are many smart ways to save money without resorting to a hermit living on packet noodles kind of lifestyle.
Putting aside money into a high-interest savings account as soon as you’re able (younger people may need their parents’ permission) shows lenders you’re a low risk. It’s even better if the bank rewards you for deposits without any withdrawals.
If you can put away 3% of your home’s purchase price over a 6 month period, lenders will look upon your application more favourably. Other tips are to put away at least half of any tax returns, bonuses or commissions into that high-interest account.
Asking Mum and Dad for help – it’s more common than you think
According to Digital Financial Analytics’ 2016 survey, over 25% of Gen Y asks their parents help with a deposit, handing over an average of $80,000. It’s either that or their parents co-sign a loan as a guarantor. If parents can’t help, it’s worth looking into share housing or living at home longer to keep rent costs lower.
Sending in the professionals
If there’s money to be made, you’ll find a slew of professionals to help make that money for you. Buyer’s agents can help you find a home that suits your budget and strategy. They can also help you negotiate the final sale. You should also bring a solicitor who specialises in real estate on to your team, as well as an accountant to navigate tax and negative gearing. It’s all part of investing in real estate to get into your dream home sooner rather than later.
Author: Bill Tsouvalas is CEO and managing director at Savvy. He has a been working in the mortgage & assset finance industry for over 10 years. He often writes articles on mortgage, finance, and insurance topics. Please visit https://www.savvy.com.au/home-loans for more information.