Looking through the eyes of our Millennial potential homeowners and investors, we dive into their perspective on their own real estate futures.
What are the top 3 financial goals of Millennials?
The top 3 goals Millennials prioritise would be striving for debt free living (no one wants to stress about looming repayments!), creating a budget that will allow a balance between lifestyle and active saving (everyone wants an adorable fur baby and extravagant house plant collection), and finally a plan for passive income such as a side hustle – this idea is very popular amongst social media influencers and the dream to earn more while working less.
Is the dream of owning their own home achievable and how?
Given the current competitive market, it can be challenging for Millennials to overcome obstacles in securing their dream home. It is achievable; however, it will be difficult to find homes like our parents may have been able to afford when they were aspiring home owners.
Are they looking at using the bank of ‘mum and dad’?
Most Millennials may find themselves in the position where they will need to borrow money from their parents to build a deposit for a home, or put forward a bond payment for a rental. The prospect of working hard and being proud of doing it by yourself sounds great, but realistically we all need some help in this real estate scene.
Has Covid, lockdowns, interest rate rises put their plans on hold?
Covid seems to have thrown most plans into some kind of disarray – for most, the interest rates are making it more challenging to break the barrier of affordability. Fingers crossed this will subside and pan-out to be a more forgiving environment.
What would be your advice from one Millennial to another in this current marketplace?
Create a budget that is simple to understand, and is realistic within the constraints of your lifestyle. Ensure you approach a bank or broker who can assess your income and spending, and can give you a safe estimation for what you can afford for mortgage repayments, and finally, ask for help when needed – millennials can be very proud in creating their own success, however we all need a little help sometimes to finding solid ground in this turbulent market.
We’ve found out some interesting lending habits of the Millennial generation (Source: Equifax.com.au)
There are a number of government grants and schemes available for first-home buyers both at the national and state level. However, numerous surveys have found that there is a lack of awareness among first-home buyers about these programs.
- Millennials are keen users of credit
- Millennials are more likely to switch lenders
- Millennials prefer building societies and credit unions
- Millennials want to do business with trustworthy brands
- Millennials like quick and easy services
The four major national government schemes are now available for first-home buyers or will be available within calendar year 2022:
Help To Buy Scheme
The Help to Buy Scheme is a shared equity scheme wherein the government helps first-home buyers purchase a home by contributing up to 40% of the property price for a new home and up to 30% for an existing one.
The scheme is designed to help with the longstanding affordability crisis. There will be 10,000 places available for eligible Australians each year. The government has not confirmed a date for when the scheme will commence.
First Home Guarantee (previously the First Home Loan Deposit Scheme)
This scheme allows eligible first-home buyers to purchase a new or existing home with a deposit of just 5%, without paying tens of thousands of dollars in Lenders Mortgage Insurance (LMI).
The scheme will now have 35,000 places each financial year, beginning from 1 July 2022.
For your best chance to secure a place in the scheme, have your tax returns done as soon as possible. To apply, you’ll need your latest Notice of Assessment from the Australian Taxation Office (ATO).
Family Home Guarantee
This is an initiative to help eligible single parents with dependants purchase a family home sooner.
Under the scheme, single parents can buy a home with just a 2% deposit without paying Lenders Mortgage Insurance.
The Family Home Guarantee is available through financial year 2025.
This scheme originally offered 10,000 total places spread across four years. The government has now added 5000 new places each year, from 1 July 2022 to 30 June 2025.
Regional First Home Buyer Support Scheme
The Regional First Home Buyer Support Scheme will potentially help 10,000 Australians a year who are living in regional areas buy their first home with at least a 5% deposit.
First-home buyers can buy a home with a deposit as low as 5% of the property value and the government will guarantee the other 15%, allowing borrowers to avoid paying LMI.
The scheme will start in January 2023.
First Home Super Saver Scheme
The First Home Super Saver Scheme allows first-home buyers to save a deposit for their first home inside their super account, to take advantage of the concessional tax treatment.
Under the scheme, the government has increased the total amount of savings borrowers can release from super to make a deposit on a home from $30,000 to $50,000.
You’ll need a determination letter from the ATO (Australian Taxation Office) specifying the amount that can be released from your super to use as a deposit for a home loan.
We’d love to hear your feedback and how we can assist you in realising your real estate goals.