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Getting prepared

Eight conversations to have when your adult child wants to buy a home


Jodie Hodgkins, Contributing author

14 Oct 2021 • 4 mins

Buying a home is an exciting time, but it can also be an overwhelming experience. As a parent you may have gone through it yourself. As you know, it's not as simple as saving a deposit and finding your dream home - there are many factors to consider in the home buying process both financially and logistically. We've put together some topics to discuss with your child to help them prepare for their home ownership journey.

1. What other costs are involved when buying a property?

There are a lot of upfront costs to be aware of when buying a property that can add thousands of dollars to the process. Highlighting to your child that they need savings beyond their deposit will prepare them for the extra costs that come along with buying a home. Read our top 12 costs to prepare for home ownership for some guidance on what to expect.

2. Research is key

A home loan is a pretty big deal - while a first home may not be a forever home it's still a major investment and likely to be the biggest purchase your child will make. Encourage your child to look around to see what works best for them. Things to consider are interest rates with different lenders, what locations are in their price range, is it accessible for work, are there schools in the area and are there nearby facilities? What are their future plans? Do they intend to stay in this home for some years to come or are their plans likely to change?

It's easy to get caught up in the excitement of a new home and how we imagine it will be. But being realistic will make the process somewhat easier for your child. Sitting down and putting a list together of what are the must-haves and what are the nice-to-haves will give them a framework to refer to when viewing homes and working out their budget.

We have plenty of resources on our website relating to budgeting and how to compare home loan perks.

3. Stick to a price range

Being committed to a price will help them stay within their budget. It's important to apply for a loan that they can reasonably afford, so as not to put themselves under financial pressure.

4. Know the incentives

In WA, we're fortunate to have some Government incentives for eligible first home buyers. It will greatly benefit your child if they are aware of what grants they are eligible for. We have a guide that highlights the various benefits offered to first home buyers. The Housing Authority's website is another great place to keep up to date with government incentives for first home buyers.

5. Mindful spending - they'll be assessed on it

When saving, your child should consider how much they can save by cutting out unnecessary spending. When applying for a loan, your child will be assessed on their ability to pay back the loan in full. There are a number of ways they can be assessed on their ability to pay back the loan in full. This may include their bank statement being analysed to determine their living expenses. It's a timely reminder to look at how much they spend on things like uber eats, and new clothes! Did you know, Keystart considers Afterpay a debt when assessing a loan?

A good place to start is our How much can I borrow tool. This will give your child an estimation of their borrowing power and what their monthly repayments could look like. From this, they can analyse their spending to determine what costs they should cut back on to manage their home loan.

6. What is conditional approval?

Conditional approval is not a home loan guarantee, it means that the lender has agreed to an approximate amount that they can borrow, however this is subject to them meeting certain conditions before a formal approval.

It's a good idea to start a home loan application before going house hunting. Securing conditional approval before starting their home ownership journey means they can get an idea of how much they can borrow and can feel secure that they are likely to be fully approved for their home loan. Read more on reasons to get conditional approval before looking for a home.

7. Never feel pressured

It's important to remind them that they should never feel pressured to commit to anything until they're sure. By following the above steps, they should be in a pretty good position to know their options before making a decision.

8. There is more to owning a home than paying your home loan

Saving for a deposit is only one step in the home buying process. There are many other costs such as settlement, shire and water fees. Purchasing a home will alter their spending habits for the long term. That's not to mention ongoing monthly bills and having an emergency fund for when appliance or maintenance issues arise. Your child should prioritise their spending habits in order to enjoy being a homeowner.

As a parent you'll want to guide and help your child on their home ownership journey. We understand that the home loan process is a complicated journey. There is an abundance of resources on our website to help you and your child prepare for this major milestone.

They're lucky to have a parent like you!

Keystart recommends that you seek your own independent financial advice prior to making any decisions about your financial needs. Any examples given in this post are provided for illustrative purposes only.