Buying a first home can be an exciting yet daunting experience for young Australians. As parents, we want nothing but the best for our children, which includes seeing them step into the property market and invest in their future. However, while we may want to guide our offspring through the process, we also need to encourage their financial independence and teach them some valuable life lessons along the way. In this blog post, we’ll share ten essential lessons aspiring first homebuyers need to learn to feel confident and prepared in their property journey.
1) Get a handle on what you can afford.
Frequently, younger generations overextend themselves and end up in debt due to lofty financial ambitions and easy credit access, among other reasons. To prevent this, we urge parents to teach their children how to budget effectively so they can determine what they can afford. Their budget should include monthly expenses such as insurance, entertainment, maintenance costs, and rates.
2) Establish a good credit score.
A good credit score is essential in securing a home loan with reasonable interest rates. Teach your children to pay their bills on time, keep their credit card balances low, and avoid excessive credit applications to establish a strong credit score.
3) Save up for a deposit.
Saving up for a deposit may take time, but it’s worth it in the long run. Encourage your children to budget for a realistic savings amount and commit to saving regularly. It’s also essential to consider other costs, such as stamp duty, legal fees, and mortgage insurance, which can add up quickly.
4) Get pre-approved for a home loan.
Getting pre-approved for a home loan strengthens a prospective buyer’s negotiating position and gives them an idea of how much they can borrow. Encourage your children to speak to a mortgage broker to learn about their loan options and get pre-approved before shopping for properties.
5) Research and inspect a property thoroughly.
Purchasing a property is a significant investment, so it’s essential to research and inspect the property thoroughly before committing. Encourage your children to ask questions, negotiate, and prepare for additional costs, such as building inspections and legal fees.
6) Consider the future resale value of the property.
While a property may seem attractive at first, it’s essential to consider its potential future resale value. Encourage your children to research property prices and appreciate the importance of choosing a property with a solid potential resale value.
7) Factor in ongoing expenses.
Owning a property involves ongoing expenses, such as maintenance costs, rates, and bills. It’s essential to factor these expenses into their budget and consider any unexpected expenses that may arise.
8) Don’t be afraid to seek professional advice.
Navigating the property market can be complex, and there’s no shame in seeking professional advice. Encourage your children to speak to trusted professionals such as mortgage brokers and real estate agents to gain valuable insight.
9) Consider buying with a partner or friends.
Buying with a partner or friends can be a great way to enter the property market, but it’s important to set clear expectations and work within agreed-upon guidelines. Encourage your children to communicate openly with their co-buyers and legally protect themselves with agreements and contracts.
10) Be prepared for the responsibility of homeownership.
Finally, remind your children that homeownership is a considerable responsibility that requires ongoing commitment and dedication. Encourage them to envisage the future and consider how owning a property aligns with their lifestyle goals.
As mortgage brokers, we understand the home buying process inside and out and appreciate the challenges and opportunities it presents. By teaching your children these valuable lessons, you’re setting them up for long-term financial success and helping them embark on an exciting new journey. Whether they’re seeking to buy their first home solo, with a partner or friends, or aspiring for an investment property, these lessons will provide confidence, clarity, and the ability to make an informed decision when buying their first home.
Terms are subject to approved persons only. This information is true and correct as of 30/05/2023. All of the content above is general in nature and may not suit your personal needs, situation objective & goals.