Buying your first home is hard. No question.
Buying your first home is hard. No question. There is (or should be) a heck of a lot of homework to do, consistent(!) saving and more than likely some sacrifices along the way. There is help though, and with the right attitude its certainly doable – but quite often it means reconciling yourself to the fact that your first home and your dream home might be mutually exclusive.
First off, its worth recognising (and understanding) that prices today are very different from pre-COVID. The $250,000 unit is now $300,000 (or more). That $300,000 cottage is now closer to $400,000 and the $400,000 4 bedroom home that was ready to go at the start of 2020 is now anywhere from $500,000 to $550,000 without much trouble. House and land package prices (long the friend of the first home buyer) are particularly aggressive today – the $399,000 all-in of years gone is just that: gone.
Unfortunately for those counting their pennies to get the best possible value, you’re either going to need to spend more, or look at starting a step lower on the ladder. That latter option is not the end of the world either. My first home (all the way back in 2016), was a 2 bedroom unit that would probably fit in my living room now. But it got me out of paying rent, gave an opportunity to improve and the equity out of that home let me make the jump to a house sooner (and a lower, more manageable mortgage in the meantime).
Interest rates can be daunting, particularly applied against those higher prices, but compared to rent, the difference might not be that much (and is worth checking out). Remember that on a principal and interest loan, the principal amount is YOUR money at the end of the day, so think of it as forced savings as you go along.
The deposit (particularly the sought after 20%) often feels like the hardest part (and honestly, it generally is) but there are alternate paths to move quicker, provided you are in the financial position to meet your repayments once in. Bank of mum and dad aside (whether via gift or parental guarantor) the government can be your friend here, with schemes to support purchase with deposits as low as 5% (or even 2% in some cases). Shared equity can also be an option to get you in quicker, and with lower mortgage repayments to boot, though at the cost of a reduced upside where the property increases in value and some tight restrictions on eligibility.