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I’m young – How can I ever afford to buy my first property? - featured image

I’m young – How can I ever afford to buy my first property?

With demand for housing in Australia’s capital cities continuing to drive up property prices. House and money

It’s no wonder we are seeing a big decline in first-home purchases by our younger citizens, particularly in Sydney and Melbourne.

They are standing on the outskirts of a staggeringly expensive property market, which seems impossible to break into.

To all those young people who are despairing about the impossibility of home ownership: don’t lose hope!

I have four key strategies to help you get your foot on the proverbial property ladder:

1. Continue your schooling

Thought you were done with studying when you graduated?

I’m sorry to be the one to tell you, but the big lessons are still coming!

If you want to buy your first home, you need to know everything there is to know about finding, buying, and paying for a

This means, for instance, that you need to know how mortgages work.

Which lender is best, and how do interest rates impact your repayments?

What types of things can impact your borrowing power?

How do you successfully apply for a loan – and what’s the difference between different loan packages and features, such as redraw and offset?

As well as finance, it’s also imperative to be knowledgeable about properties and what drives market prices up and down.

You’ll need to know what constitutes a good house (this is true even if you’re purchasing your own home; remember that even your own residence is still ultimately an investment), what to look for when you inspect a property, and how to value a home before bidding or putting in an offer.

Buying at auction requires a whole different set of rules to buying through an agent. 

You don’t want to be caught out buying a home with a set of terms and conditions you weren’t aware of, so this requires an education of its own.

I could go on for hours, but you can see why it’s so important to know about all these things before you jump onto a real estate website and start searching for your perfect property.

Jumping in blind can lead to long-term mistakes that could set you back a long way on your home-ownership and investing journey.

Thankfully, there is a wealth of information available at your fingertips.

Books, magazines, blogs and informational websites including this one, seminars, real estate websites and mortgage comparison sites will help you answer some of these questions.

Start learning as early as you can: it’s free, and builds a good foundation to making your first home purchase.

2. Ask the right people

Knowledge is an excellent base to start from, but it needs to be teamed up with experience.  Discussion with a real estate agent

As a twenty-something young adult buying your first property, you won’t yet have any experience – that’s why you should talk to people who do.

You’ll need to find impartial people who can guide you and answer any questions along to way.

Family and friends who have been through the process of buying a home are a good starting point.

Remember, if you speak to a bank manager or mortgage broker who is affiliated with a particular bank, their opinions will be swayed in favour of their lender.

The same goes for a real estate agent – their best interest is to help the seller, not the buyer. 

That’s why you need to do all your research before you jump into a purchase.

You’ll also need to spend a significant amount of time talking to the experts.

Mortgage brokers, selling agents, tax accountants and financial advisers will be able to give you invaluable specialist advice in their field.

3. If the dollars don’t work, consider other options

If buying a home in the area you want just simply isn’t viable at this stage, consider other options.

Maybe you could invest in a property in a more affordable area, and then rent in your desired neighbourhood?

The advantages are two-fold: you get a foot on the property investment ladder, and you can live where you want to live even when it’s out of your purchasing price range.

You could also consider bumping up your borrowing power by renting out rooms in the home you want to buy.

How would your finances look to a lender if you had rental income added to it?

4. Consider your budget your best friend

It’s a crime that budgeting is not a subject taught at school, because it’s a life skill that every adult should be adept at.

Budgeting basically means balancing expenditure and income, with the goal of having money left over.lose saving

Too many of us are struggling through life with no budgeting plan, living beyond our means, and paying dearly for it.

I can’t stress enough how important it is to begin a budget as early as you can.

If, at the end of the month, you’ve spent more than you earned, then you need to change the way you spend – or at least, realise that you need to find ways to increase your income.

Saving is the goal of your budget, not just a bonus at the end.

It takes a fair bit of practice and trial and error, but ultimately when it comes to buying life’s big-ticket items like houses, having a solid budget in place means you’ll know exactly what you can afford.

Being a good ‘money manager’ takes a lot of the uncertainty and fear out of managing a mortgage.

Ultimately, while buying a home as a young adult has its challenges, it’s not impossible – even in markets as expensive as Sydney.

If you’re committed, there are many strategies you can employ now (even as a teenager) that will help to make property ownership a possibility sooner rather than later.

Want some help?

If you’re thinking of buying your next home (or maybe your first home) and you’d like to explore how the team of specialist home buyer’s agents at Metropole can help level the playing field for you why not have a chat with us?  

Just click here to learn why you should use Metropole to help you buy your next home.

We’ll explain our unique 5 step home acquisition process that will help you decide what type of property best suits you and where that property is located.

Or please call us on 1300 20 30 30 to find out how we can help you or complete this form to send us your wish list and we will contact you.

We’ll also send you our consumer report – The Home Buyer’s Protection Pack when you leave your details here

About Brett Warren is National Director of Metropole Properties and uses his two decades of property investment experience to advise clients how to grow, protect and pass on their wealth through strategic property advice.
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