With all of the media attention focusing on Australia's out of control property prices it's understandable that young first home buyers may feel priced out of the market. However, we happen to know that with the right planning, strategy and advice it's possible to buy property in Australia at 25. Here's how.
Buying a home is like writing an essay – you're not going to get far if you don't have a plan.
A Member's Bank study revealed that the savings habits of Australians leave something to be desired in this regard – 59 per cent did not habitually set a budget and 41 per cent did not regularly stick to it.
Moneysmart data also reveals that 75 per cent of confident savers have a detailed plan. Be a part of this group and break your savings goals down into weekly, monthly and yearly instalments. That way you wont be aiming at something far off on the horizon, but for something more imminent and motivating.
Export your online bank statements into a spreadsheet, or use a savings planning app to do so. That way you can understand what you overspend on, set limits and stick to them to achieve your goals of investing in your twenties.
The same Moneysmart report shows that 78 per cent of confident savers know how much money is needed to reach their goals. Do as much research as possible on how much your home will cost, and how much it is likely to cost in the future – use resources like CoreLogic RP Data, Residex suburb reports and even advice from a buyers' agent.
78 per cent of confident savers know how much money is needed.
Let's say for example you're looking to buy a one bedroom apartment in Melbourne for $400,000. Most data shows prices going up – but forecasts such as QBE's Housing Outlook has Melbourne unit prices decreasing by 9 per cent by 2019.
In this instance it would be prudent to save 20 per cent of $400,000 so that you have a buffer if prices forecasts weren't correct. If you're earning the average income of all workers according to the Australian Bureau of Statistics ($60,320), you save 20 per cent of your income and apply for the first homeowners grant you'll be close to your deposit goal after just over 5 years. Save with a partner and you could be in a house within 3 years!
Alternatively talk to a mortgage broker about securing a loan with a low deposit and lender's mortgage insurance and you could be buying property even younger.
Apply for the first homeowners grant early. Depending on where you live, it could shave as much as $10,000 to $20,000 off your deposit. Next, get help. Do your research and find an area and type of property that you want to buy then consider enlisting a buyers' agent to help you find a property that fits your needs.
Atthis stage it's time to get your finances in order. A recent First Home Buyers Australia survey found that 38 per cent of first home buyers believed mortgage brokers were the most helpful service when purchasing property. We at Mortgageport know that we provide an incredibly useful service to you, finding you the most suitable loan products and a better deal. We can help make investing in your twenties as easy as possible.
Get in touch today for expert advice on financing your first home – it's never too early.