And how sensible is that! A new report from eHarmony in the US has discovered most millennials live together for at least 6.5 years before finally walking down the aisle so have a lot of the usual household items – having already combined two households into one. So a gift of contributing to a mortgage repayment is a great idea!
But what other ideas can help younger people get into the property market earlier?
Firstly, you must have 5% genuine savings – even with the Government’s new “First Home Loan Deposit Scheme” due to come into law next January, 2020. Although details are a little sketchy, it appears for the first acceptable 10,000 applicants the Government will provide the mortgage insurance for those with deposits less than 20% of the purchase price.
You need to have approval from a lender under usual conditions – that is a whole other story and earn within a specific salary range*. While this no doubt will be a saving for some first home buyers, inevitably once Governments interfere in markets, prices may rise to meet these conditions.
So why you should NOT wait till January to buy?
- When the rules around this finally come into law, you may not qualify.
- Of the approximately 80,000** First Home Buyers each year, only 10,000 will get this advantage.
- The real winners will be vendors as inevitably this could drive prices higher because if you are saving on Lenders Mortgage Insurance, which can be costly, you may be able to borrow significantly more.
So, my advice for purchasers – do not wait!
*Income is capped to $125K for an individual and $200K as a couple
** Source: Genworth