In a world with easy access to credit, becoming financially savvy and knowing how to invest to create wealth is more important than ever for young people who want to get ahead. But one of the most common concerns is whether The Great Australian Dream of owning your own home is out of reach for many young people. Mr Robert Projeski, the Managing Director of Australian Mortgage Options (AMO) believes that while these hurdles are real, they’re not insurmountable.
In a recent radio interview on 2UE with Tim Webster, Mr Projeski acknowledges that “it’s a topic that has been talked about for a long time, and it’s a hard one to address.”
To help the public navigate through the complexity of Australia’s financial system and understand the challenges of the property market, AMO is teaming up with one of Australia's oldest commercial national radio station, 2UE to present the “Smart Money” series. The show is aired every Tuesday between 3-4pm, and encourages members of the public to call in and ask questions about property and finance.
So what steps can a young person take to owning their own home?
Live within your Means
One of the hardest skills to learn for many young people is to plan a budget, save for the future and to invest their savings wisely. This critical step along with listening to such shows as the "Smart Money" series will help them to become more financially literate, as well as helping them to move closer to their goal of home ownership. Mr Projeski has a few tips for young people who are looking to save up for a home loan deposit. "The most important thing is to set a goal to save up as much as you can - at least 5 percent of the required deposit as a minimum, though 20 percent would be more ideal in order to avoid paying mortgage insurance” said Mr Projeski.
Invest while Renting
Many young Australians believe that real estate is still one of the best assets to invest in, but some find it too hard to work and save at the same time.
Instead of restricting themselves to a life of frugality, many young Australians choose to rent closer to their place of work or study. They do this for convenience and lifestyle, while buying an investment property in more affordable locations, such as in Brisbane or Adelaide, where the median house price is much lower than those in Sydney.
If renting is your only option, Mr Projeski says that “The best strategy for young people who are currently renting is to pay their rent on time to avoid getting a blemished credit score later on." Not only is a good credit score proof of sound financial management, it will also determine whether the banks are willing to trust you enough to lend to you.
If you are thinking about getting into property, it’s important to discuss your options and find out about your borrowing capacity. Call AMO on 133 266 for an obligation free financial health check and start taking the necessary steps to own your own home sooner.