And how sensible is that! A new report from eHarmony in the US has discovered most millennials live together for at least 6.5 years before finally walking down the aisle so have a lot of the usual household items – having already combined two households into one. So a gift of contributing to a mortgage repayment is a great idea!
But what other ideas can help younger people get into the property market earlier?
Firstly, you must have 5% genuine savings – even with the Government’s new “First Home Loan Deposit Scheme” due to come into law next January, 2020. Although details are a little sketchy, it appears for the first acceptable 10,000 applicants the Government will provide the mortgage insurance for those with deposits less than 20% of the purchase price.
You need to have approval from a lender under usual conditions – that is a whole other story and earn within a specific salary range*. While this no doubt will be a saving for some first home buyers, inevitably once Governments interfere in markets, prices may rise to meet these conditions.
So why you should NOT wait till January to buy?
But what other ideas can help younger people get into the property market earlier?
Firstly, you must have 5% genuine savings – even with the Government’s new “First Home Loan Deposit Scheme” due to come into law next January, 2020. Although details are a little sketchy, it appears for the first acceptable 10,000 applicants the Government will provide the mortgage insurance for those with deposits less than 20% of the purchase price.
You need to have approval from a lender under usual conditions – that is a whole other story and earn within a specific salary range*. While this no doubt will be a saving for some first home buyers, inevitably once Governments interfere in markets, prices may rise to meet these conditions.
So why you should NOT wait till January to buy?
- When the rules around this finally come into law, you may not qualify.
- Of the approximately 80,000** First Home Buyers each year, only 10,000 will get this advantage.
- The real winners will be vendors as inevitably this could drive prices higher because if you are saving on Lenders Mortgage Insurance, which can be costly, you may be able to borrow significantly more.
So, my advice for purchasers – do not wait!
*Income is capped to $125K for an individual and $200K as a couple
** Source: Genworth
Property Marketing Tragedies
I regularly meet people who have suffered at the hands of “Property Spruikers” and been sold some really dreadful loss-making properties. One such enterprise in Sydney charges $10,000 for their supposed advice, then takes a kick-back from the developer on every property sold by them to their unsuspecting clients – usually mum and dad investors who didn’t trust themselves to make investment decisions. People have ended up with properties all over the country (and some even in other countries) worth far less than they paid for them and once these mortgages convert to principal and interest are unsustainable as investments.
So how do you avoid getting into this situation?
- Always do your own due diligence – it’s your money!
- If someone is taking a kickback from a developer – calling it a marketing fee or the same as a real estate agent, make them prove to you how many they have bought themselves and prove this on paper – not just verbally.
- Get an independent valuation (impossible to get this if you buy “Off the Plan” and it won’t settle for years to come so the lesson here is not to buy “off the plan”.
- Start paying principal and interest on your investments so you are only keeping what you can afford and increasing your equity as you go. If it is such a bad investment that the rent return and expenses are in no way allowing you keep the property when it becomes a principal and interest loan because you are relying solely on promised capital growth (which may never come), then maybe think about this before you buy in the first place.
And just to CONFIRM, we DON’T refer to any real estate agents or property developers to receive a kickback. When we educate, we teach you how to do your own due diligence so you really know why you are buying, the figures related to the purchase and how it works for you!! Ask us about our new course – “How to Buy A Property in 28 days” which will help you gain the confidence to buy successfully.
As always, if I can be of any assistance to you, please call me on 0412 709 200.
With thanks,
With thanks,
