Buying their first home is a massive step in a young person’s life, and parents can play a big role in teaching them some lessons and offering experience and support.
It is often a balancing act between giving them a step up the property ladder and letting them be independent and learn the value of money.
Telling them some of these home truths you’ve learnt the hard way can help them find their feet while minimising any damage done from first home buyer mistakes.
Understand what you can afford
Young people can easily fall into the trap of setting their aspirations too high and over-extending financially. This can mean they end up in too much debt that takes years to pay off.
To understand what they can afford, you’ll need to teach them how to set a budget, with all monthly expenses and costs that come with owning a home. When you subtract the expenses from their income you can work out how much they can afford to spend on a monthly mortgage.
Be aware of all expenses
Seeing as it’s the first time your children are buying a home, they will probably not be aware of all the costs that can be associated. Things such as legal fees, moving costs, new furniture, rates, insurance and maintenance are all costs that young people won’t be used to paying while they’ve been living with you – their parents.
To avoid disappointment it’s wise to know how much you can spend and to get pre-approval for exactly the sort of loan the bank will give your child.
Not only will they be more prepared when they want to strike, but it also helps if they are looking to buy in inner-city areas where auctions are popular.
See the potential
A young first home buyer might not have the ability to see the potential when it comes to a home that needs a bit of cosmetic work. If they are prepared to get their hands dirty they can buy a home at a low price and improve the place, increasing the equity which puts them ahead when trying to move upwards with their next property purchase.
You might need to teach your children about trying to imagine what the real estate market will look like in the future. They might have to put aside their immediate needs and desires, knowing that the property represents a good investment long-term.
Inspect the property thoroughly
You obviously can’t live in the home before you buy it, but it’s a good idea to recommend to your children that they inspect the property numerous times, during both night and day.
This will allow them to get a proper idea of changing factors such as light levels, noise and general environment. They could even talk to neighbours to discuss their opinion of the property and area.
Consult the professionals
You’ll need to teach your child about getting a pest and building inspection, to avoid costly works down the track if you neglect to do so.
Also there’s a market valuer who can give you an accurate price for the property, a solicitor can help with any problems and even a buyer’s agent can give great advice.
Teaching your children the skills needed to successfully negotiate can save them a lot of money, and will also give them the confidence to walk away when the deal isn’t right for them.
Helping your children learn some of these tools to assist them with the big step towards lifelong independence that is first home ownership can be far more valuable than just giving them a cash injection. They will be better equipped to stand on their own two feet and manage their own finances for the future.