There is a tendency to think of first homebuyers as young - maybe in their early twenties - but a study in the UK last year comparing first homebuyers in several countries found that the average age of a first homebuyer in Australia is in fact closer to 40.
Interestingly, the youngest average age was in Belgium (27 years old). In the USA it’s 33, the UK 34, New Zealand 35, and, surprisingly, Australia comes in at 36. So why are Australians buying their first homes later? Are there advantages to waiting - or is getting in earlier better in the long run?
Finance expert and savings.com.au editor Dominic Beattie says the key difference between younger and older first-home buyers is the fact that older buyers have less time in their working life to pay off their mortgage.
Applying for a 30-year mortgage at the age of 45 will mean greater scrutiny by your lender, as you’ll be 75 when the term ends - well past the current retirement age - so you’ll need to have some kind of repayment plan in place. Buying a home earlier in life does mean you start your journey to homeownership and financial freedom earlier, but you’ll need to do your homework and be armed with the right information. For instance, in your early twenties you’re less likely to have saved much of a deposit and may be on a smaller salary, so qualifying for a loan could potentially be more difficult.
Working out how much rent you’re paying over the course of a year could be a major motivator in deciding when to purchase your first home. Perth's average weekly rent has skyrocketed to a six-year high, up 21.6 per cent in the past year. The average weekly rent for a home in Perth is $450 - or a $23,400 annually. Read more about that here.
If you’re paying this kind of rent, you probably can consider owning your own home! But it’s a big decision. The most important thing is to have a plan - you need to feel ready, you need to be comfortable with having debt, to understand what’s involved, and - most importantly - you should get good advice from a trusted mortgage broker or finance specialist. They will let you know what you can afford and help you through the application process, including sourcing any government grants you may be eligible for.
First-home buyers, no matter their age, can find financial assistance. And in Western Australia, first home buyers are eligible for a grant of $10,000 to buy or build a new property. The WA Government also offers up to $2000 for the expenses of first-home buyers for homes priced under $400,000 as part of the Home Buyer Assistance Account. There’s also a stamp duty concession for first-home buyers on any home purchase up to $430,000 with concessions available on homes valued between $430,001 and $530,000. All first-home buyers could be eligible for the First Home Super Saver Scheme, a national program that lets those eligible to save money for their first home inside their super fund.
Remember, these are usually one-off payments to help you get into the housing market. You are ultimately responsible for the ongoing costs of servicing the mortgage - and all the other costs associated with home ownership!
Bottom line, it’s never too early or too late to purchase your first home. There is no right or wrong, it will depend on your personal circumstances. There will be sacrifices to be made at whatever age you purchase, but learning the money management skills to do this is a great life lesson to learn early!
Just remember to focus on the big picture - any sacrifices now should pay off later. Your mortgage repayments are an investment in your financial future - if you have purchased wisely your investment should increase over time, and home ownership is a great way towards achieving financial freedom.
If you are thinking about starting your home ownership journey at Baldivis Grove, there is no better way to start than to have an informative conversation with our friendly Project Sales Manager, Robert Piromalli. You can reach Robert by calling 13 38 38!