Getting a foot onto the property ladder has never been more difficult – but difficult doesn’t mean impossible.
As house prices keep soaring, property ownership is becoming increasingly challenging for young women to attain. Saving a deposit is harder and takes longer than ever before. However, there are ways to make this dream a reality.
As the points below demonstrate, it ultimately boils down to how disciplined you are with your money and what financial supports you draw on.
1. Build an emergency fund
Separate from your savings, an emergency fund is easily accessible cash set aside for a rainy day.
While it may seem counterintuitive to set aside money while you’re trying to save up a deposit for a house, there are two reasons for doing so:
- having money available in a crisis means you won’t need to raid your savings to get by; and
- it helps you demonstrate a reliable savings history – something your lender will look at when determining your loan application.
2. Control your debts
Credit cards and Buy Now, Pay Later (BNPL) programs may seem convenient, but cost a fortune if you miss your repayments. The same goes for paying bills on time to avoid late fees and interest.
Direct debits are simple but make it harder to keep track of what you’re spending.
Not being diligent with your taxes can see you unhelpfully overpaying tax or accruing penalties.
Build your savings faster by living within your means – paying in cash and using a budgeting app can help.
3. Make friends with super
Many young women overlook superannuation, but it’s more relevant to your property aspirations than you may think.
If you meet its eligibility criteria, the first home super saver scheme (FHSS) allows you to make personal voluntary contributions into your super fund to help you save for your first home, while enjoying various tax benefits.
Income protection and permanent disability insurances can be paid out of your super, rather than your bank account. Having this cover will safeguard your deposit savings if you get seriously sick or lose your job.
4. Think with your head
Your first property is very unlikely to be your forever home. The goal is to get your foot onto the property ladder – you can step up later. As such, think with your head, not your heart.
While you may dream of a beautiful home to live in, it may make more financial sense to buy:
- an investment property instead;
- a property with good fundamentals rather than good aesthetics;
- in a cheaper market than where you currently live.
5. Visit the Bank of Mum and Dad
A 2023 Finder survey found 11 per cent of first-home buyers accessed financial support from their parents, receiving $56,231 on average.
While casually known as the ‘Bank of Mum and Dad’, financial assistance may also come from grandparents or other close relatives.
Support can come in many forms, including money towards the deposit, acting as mortgage guarantor, or buying the property on your behalf – perhaps as an investment for them that you pay off over time.
How this works will depend on their financial situation, risk appetite and the property’s value.
6. Co-ownership
Buying with someone else allows you to split the costs, making it easier to get into the property market.
That could include purchasing with a sibling or good friend, co-habiting with your parents (such as one of you in a granny flat/separate level) or moving in with your partner.
Be sure to agree who contributes what (both up-front and ongoing costs), the percentage you each own, and whether you are joint tenants or tenants in common on the title.
A word of caution
Mixing family and money can put a strain on even the best of relationships. And each method of assistance has its own pros and cons.
If you do seek support from others to buy property, have frank discussions about:
- The terms of financial support. Is it a gift? Is it a loan – with or without interest? Is it early inheritance? Is it shared equity in the property? Is it a loan guarantee?
- How this impacts your siblings/other relatives (e.g. will you receive proportionately less in the will? Will your siblings be offered the same?)
- Putting agreements in writing. Drawing up a contract with a loved one may feel awkward, but it’s better to be safe than sorry
- Getting independent legal and financial advice: what is good for you may not be good for whoever is offering you support, or vice versa.
After all, the point is to help set you up for life, not diminish the quality of life and relationships you already have.
Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754.
