Invest
What younger Australians are getting wrong about home loans
As young Australians look to fight the odds and take their first step onto the property ladder, more and more are making easy mistakes.
What younger Australians are getting wrong about home loans
As young Australians look to fight the odds and take their first step onto the property ladder, more and more are making easy mistakes.
For some younger Australians, the possibility of being locked out of the country’s housing market is as much a fear as it is an opportunity.
A growing gulf between housing prices and wage growth has inspired many to jump into the market no matter the cost. However, some experts say that desperate rush into the market by younger investors has seen many mistakes made along the way.
Speaking to nestegg, personal finance expert and Life Sherpa CEO Vince Scully said that one of the conventional wisdom around property investment has quickly become one of the bigger misconceptions among younger Australian investors.
According to him, most people who get into financial strife have either bought too much house or too much car.
“Getting the right amount of house is the number one step where most people get carried away,” he said.
Mr Scully said that in the early ’80s, buying the biggest house you can afford was generally the way to go because inflation would cover the cost sooner rather than later. However, he said that the same advice doesn’t necessarily make the most sense in today’s market.
But how should younger Australians determine what the right amount of house looks like? Mr Scully advised them to look at what they can buy for around five-to-six times their income or four-to-five times their income, if they’re on a lower wage.
“If you overdo it, you’re going to have to spend a lot of time cutting back,” he warned.
The second misconception that younger Australians have about home loans, he said, is the belief that they need a 20 per cent deposit.
Mr Scully argued that in a rising property market, lender’s mortgage insurance isn’t as big of a deal as people think it is.
Asked what young Australians should be looking for in their home loan provider, Mr Scully warned them not to focus too much on big-ticket things like price or rate. He suggested that they think more about the ways in which their income might be non-standard.
“If you depend on commission or bonuses or casual income or if you’ve got some income outside your job or you’re self-employed, the bank’s policies around how they assess that income in determining how much they’ll lend you is actually much more important than the rate,” he said.
“Very little of this policy information is made public,” Mr Scully added.
“How long is it going to take them to give you an approval, and is the pre-approval they’re going to give you an actual assessment or is it just plugged into a calculator? Those three things are way more important than the price or the colour of the credit car you’re going to get.”
RELATED ARTICLES
About the author
About the author
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
