It has become one of the country's largest mortgage lenders
Millennials who are looking to buy a home in Melbourne or Sydney should turn to parents for financial support, otherwise it’s “probably never going to happen,” according to property expert Andrew Winter.
“The prime central parts of Sydney and Melbourne are always going to be the most expensive parts of Australian real estate, that’s not a boom thing, they always have been and will continue to be so. The boom just emphasises it,” Winter told news.com.au.
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This advice especially applies for first homebuyers, who, Winter said, would be better off considering outer areas of Adelaide, Perth, Brisbane and the Gold Coast.
To begin with, most Millennials are unable to afford the 20% home deposit. Winter suggested turning to the so-called Bank of Mum and Dad (BOMD) for a shot to enter the property market.
The BOMD has become the country’s ninth largest mortgage lender with $34 billion in loans as more parents are providing financial assistance to help their adult children buy first homes. Last year, Legal & General revealed that BOMD is behind more than half of the house purchases from people under 35.
“If you’re a parent living in a regional town, your house has likely gone up about $50,000 to $100,000 recently, and you could easily top up the mortgage or take out a tiny home loan for next to nothing to help fund the deposit,” Winter told news.com.au.
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Although this method might be taken as controversial, embarrassing or even entitled, there is no denying that it will “help them in the long run.”
“They’ve got to maintain the mortgage payments and the house. They’ve got that obligation to pay you back. I wouldn’t say it’s spoiling them,” Winter told news.com.au. “If anything, it’s probably bringing them to their senses. It gives your child independence and a financial foothold.”
