First-home buyers may need up to four months longer to save for a deposit compared to a year ago according to a report by Domain released recently.
However, the decline in housing affordability appears to have been offset by more recent post-COVID price falls in many areas, falling mortgage interest rates and government incentives such as the First Home Buyer Grant.
In addition, the Morrison Government announced last week plans to relax credit laws to encourage faster, easier loans to help first home buyers get into the property market.
For young people, the seemingly unreachable goal of owning their first home might therefore be suddenly feeling closer to reality.
According to Darren Hooper, General Manager of Central Coast Unity Bank (CCUB), it is still very important, amidst all the excitement, for young buyers to educate themselves and be aware of all the offers out there to ensure they get the best value.
“Buying your first home is one of the most important decisions you will ever make,” Darren says.
“It can set you up for the rest of your life if you do it right.”
Darren said there are four simple things young buyers should consider before launching into the market.
The first is to know how much you can afford.
“There can be a difference sometimes between what you can borrow and what you would like to borrow.
“There are many factors involved including the level and stability of your income – and you can get help from a CCUB lending specialist to work through this.”
The second is to consider the “bank of mum and dad”.
“Parental assistance can take many forms – parents can borrow against their home to help with a deposit, or they act as guarantors or even part-owners.”
Darren also cautions budding home buyers to crunch the numbers.
“Add up all your loan costs – not just the mortgage, but also stamp duty, LPI fees, strata fees for units, property insurance and mortgage insurance, etc.”
The final tip Darren gives to young home buyers is to assess their eligibility for the First Home Buyer Grant or other government incentives that target first homeowners.
“It was announced a few months ago that stamp duty has been slashed for first home buyers – and it is completely eliminated for first home buyers buying a new home under $800,000 or vacant land under $400,000 until August 2021.”
Darren warns young home buyers that the first years of owning a home are the most challenging.
“There’s often new expenses, a growing family, or even a new career”.
His biggest piece of advice is that when you need help, ask for it – don’t leave it until it’s too late.
Central Coast Unity Bank is a division of the broader Unity Bank group which began life in 1970 as the Waterside Workers of Australia Credit Union.
It has grown steadily since then through mergers with other credit unions, including the Gosford City Credit Union in 2010.
Darren says that while some of the bigger banks have become large and impersonal, Unity Bank has remained closely connected with its members and their communities, continuing to provide support to borrowers in both the good times and the bad.
“It’s one thing to offer young people an attractive mortgage rate, but its another thing to be there to help them through the difficult times they inevitably encounter over the course of a mortgage.”
Ross Barry