A lot is said and written about the difficulties that millennials face in being able to afford their first home. While for some millennials the traditional ‘Australian Dream’ has moved away from home ownership and is now based more around general lifestyle such as owning a nice car and taking regular vacations. Essentially, these millennials are living the ‘Australian Dream’ but are choosing to live their lives and rent a property rather than save up the cash to pay for a deposit over a period of years, which they feel may see them miss out on the chance to enjoy a variety of experiences.
Not All Millennials Have Written Off Home Ownership
While a large proportion of millennials have written off their chances of ever owning a home, there are still many of this generation who have their sights set firmly on buying a home. We’re going to take a look at what millennials can do to help them buy their first home, whether they hold home ownership ambitions or are in the group who believes they’ll never be able to afford it.
It Is Possible for Millennials to Become Home Owners
The great news for you if you’re a millennial is that home ownership is definitely affordable. While it is likely that you will be saving for longer and will have to pay more for your first home than your parents did, that isn’t the same as saying it is completely out of reach. It’s also possible for you to save enough money to be able to afford a mortgage deposit without needing to completely pare back your lifestyle and standard of living.
What steps will help you achieve this?
Look at How You Budget
Often when the word “budgeting” is brought into a conversation we initially think about having to live well within our means. If you want to save for a mortgage deposit quickly, then you may choose to save a greater amount each month and sacrifice various things, but it is possible to save and still enjoy nights out and the opportunity to treat yourself to new clothes once in a while.
The key to looking at your personal budget isn’t to look at everything you can cut out, but to look at where you can make small changes that in time will make a bigger difference.
Start with the simple things like:
- If you’re a car owner, do you drive and use fuel unnecessarily for short journeys?
- Cutting back on your morning coffee. If you spend $6 every morning, for example, consider taking a flask and only use the coffee shop on Monday and Friday.
- If you can do it with your coffee, you can do it with your lunch, too. How much do you spend each day?
- Consider how much food you waste and change your shopping habits accordingly.
Small, simple changes in how you approach your life and your spending can make a huge difference to what you have available to save each month.
Think About Upskilling
What do you do for a living? What do you want to do for a living? What are the opportunities both in your current job or in another area where you have ambitions?
We’re not asking you this because we want to take you on some spiritual journey to help you discover yourself at work. Instead, we know that the easiest way for most people to be able to save more quickly for a mortgage deposit is to earn more money. For the majority, this means either moving into a new job or getting promoted with your current employer. We also know this can be easier said than done. You aren’t just going to get promoted or earn the skills to be able to achieve a career change overnight, which means you should think about upskilling.
What skills do you currently have, and what skills do you need to learn to get the promotion or career change you’re looking for? Once you know what you need to do, you can start exploring your options for undertaking this upskilling and preparing yourself for a better paid position, whether you stay with your current employer or move on.
Will learning new skills cost you money? It is likely, but look at it in the same way as home ownership; it’s an investment. You may have to pay out for a professional development training program today, but what is that going to allow you to achieve and earn in the long run?
Consolidate Existing Debts
Some millennials may feel home ownership is beyond them due to existing debts. This feeling could be particularly acute if you’re holding thousands of dollars in credit card debt and are only making the minimum payment each month, thus seeing your debt remain static as you do little more than service the monthly interest added to the balance.
While it is possible to save for a mortgage deposit and apply for a mortgage while holding existing debts, you should consider:
- You may not be able to save as much as you wish.
- Your existing debt commitments may influence how a lender views your mortgage application.
One option you have is to consolidate your existing debts. This could help you to get debt free quicker, meaning:
- You will then be in a better position to save for a mortgage deposit.
- Assuming you take on no additional debt while paying off any consolidation loan, your debt commitments and exposure will be much lower when a lender considers a future mortgage application, which may help you move into your dream home.
What Do I Do Next?
Whether you’re a millennial with longstanding home ownership ambitions, or you’ve become convinced that home ownership isn’t completely out of reach while reading this article, what you do next will depend very much on your own circumstances.
NOW FINANCE may be able to help you.
While we don’t offer mortgages or personal loans to be used as mortgage deposits NOW FINANCE provide personal loans for education and training as well as debt consolidation purposes. If you need to take steps now to make home ownership more accessible in the future, one of our personal loans could help you to pay for your training costs or escape the revolving credit card debt cycle in which you currently find yourself.
You can get your interest rate here before applying for a loan, or call 1300 275 669 to speak with one of our personal loan experts prior to applying.
Disclaimer: This article contains general comments and recommendations only. This article has been prepared without taking account of your objectives, financial situation or needs. Before taking any action you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs. If this article relates to the acquisition, or possible acquisition, of a particular credit product you should obtain and consider the relevant disclosure documents before applying for the product.