According to an article at Ninemsn, Aussie Generation Y’ers are finding it hard to get finance for home ownership, due to their job hopping and lack of savings. Generation Y’ers (said to be born from the mid 70’s to the early/mid 90’s) grew up with the internet and the accelerating pace of tech, and so it could be said that they find the requirements of getting a home loan a little out of synch with the near instant gratification that high tech and fast downloads provide. With that in mind, these tips won’t (hugely) cramp a Gen Y’ers style, but will definitely help their home loan prospects.
An oldie but goodie, setting up a completely separate bank account that you can’t easily access is a great way to “force yourself” to save money, so that means you shouldn’t carry around debit cards or bank cards linked to that account, lest you be tempted to spend it. Once that money is out of your regular account it’s like it was never there, and those savings will quickly start to build. The reason for doing this is because most lending institutions require you have a 20% deposit for a conventional home loan, otherwise they require a stable work history, which brings us to…
If you can’t secure a 20% deposit on your home loan, the banks and other lending institutions will look to your work history. Typically, you will need to have stayed at your current job for 12 months or been continuously employed for 24 months within the same industry to be considered for a loan.
This may seem obvious, but it bears repeating: If you are late in paying your bills, you will negatively impact your credit rating, which will make getting a home loan that much harder. Even if you are 30 days late in paying your phone bill, you affect how easily you’ll be able to get credit.
This may sound like unusual advice, but if you don’t have any kind of credit history (unlikely for most of us, but then again Gen Y’ers are younger than most of us…) then it is understandably difficult for banks to willingly give you a home loan. So get a credit card, use it responsibly, and then pay it off on time. This will increase your credit rating and show banks that you can manage your debt responsibly.