Wednesday, 19 October 2016

How I, A Millennial, Afforded A Deposit On My Own Home

On the weekend Bernard Salt published a thing in The Australian suggesting that young people should stop eating smashed avocado with feta on toast and save the money for a deposit on a house instead, and millennials/millennial-allies (millenniallies?) rightly and righteously lost their #smashedavo shit over it.

This relates to my phd adventure in that I am in the somewhat anomalous position of being a post-graduate-student/millennial/single-person-mortgage-haver (I’m getting business cards made), so I thought I would write about how many Vegetarian Big Breakfasts I had to skimp on to get into property.


(Graphic: https://www.theguardian.com/news/datablog/2016/oct/18/are-millennials-actually-bad-at-saving-or-are-houses-just-unaffordable)

The answer is, of course, are you even kidding me right now?

This is how I could afford to own my own home.

First of all, I did my masters degree in Adelaide so when I came back to Perth, it made sense for me to live with my parents for a while as I settled in and looked for a job. Four months of job-hunting later I was down to about $7 in savings (actually literally) and then the heavens opened up and I got a call back and a full-time contract. Do you know how many graduates find full-time jobs four months after graduation? 68%.  Good luck, bitches!!

It occurred to me at that point that paying for a mortgage in this city would be about as affordable as paying rent if I could get the money together for a deposit, so after I started work I spent another eight months rent-free at my parents house. They were able to put me up rent-free because they’re middle class homeowners who got free education in the 70s. I paid for my phone bill, I cooked dinner for them occasionally, I bought a secondhand car, I got $320 taken out of my pay every fortnight for my HECS debt (hahahaha nope), and I saved the rest.

Go on, millennials! Live with your parents! But also, grow up! But save money! But don’t be a sponge! Why are you like this? What’s wrong with you?

The next thing that happened is that I was lucky enough to have my contract converted into a permanent position. Banks like you to have a permanent position when you’re applying for a mortgage because it makes you look like you have a stable, reliable income. If you don’t have a permanent position, you need to show several years of contract work. Do you know how many millennials are working in permanent positions? Do you know how many Australians have permanent positions?

Nope.

So I took my savings and my permanent job and my First Home Owners Grant (fun fact! The FHOG has dropped from $7k to $3k since September 2013!) to a mortgage broker and he said I was actually a good candidate for a home loan and he told me how much I could afford and I politely laughed in his face and said I was not going to spend 40% of my post-tax income on a mortgage, thank you. When my parents bought their house in the 80s (back when houses were about as expensive as a nice holiday, I'm assuming) they could only get a loan up to 25% of just my dad’s income, on the assumption that my mum was probably going to get pregnant and have babies and quit work anyway.

Thanks for the financial advice, middle-aged mortgage broker!

The second mortgage broker I saw was a bit more realistic and gave me an upper limit that would be about 30% of my income and I thought that was reasonable and I could work with that. (This turned out to be a Very Good Decision because when I decided to go back to uni I had juuust enough financial flexibility to afford it.)

Look, I don’t want to be vulgar about money by being too specific but I think it’s a bit late in the piece for that - my upper limit for property was $200,000.

Do you know what you can get in Perth for $200k?

Sweet FA.

Actually that’s not entirely true - you can get a kind of nice one bedroom apartment in a kind of nice suburb, which is what I ended up with, and I need to tell you now that I absolutely love my place.

But there's still more to the story. I had what I thought was enough to cover a wee 5% deposit, but then it turned out that at 48m2 my place was too small for a home loan with a 5% deposit and I would have to put down a 10% deposit instead. Did you know that sometimes if you can’t afford a big enough property you need more money to pay for a larger deposit?

Back to my parents. I borrowed like another $8k from them, which again they could afford because they are middle-aged, middle-class home owners. I don’t know what I would have done if they didn’t have that kind of money on hand. Saved for another 6 to 12 months while the price of houses went up around me? Waited until I got married so I could buy property on a dual income? (Don’t even get me started on that one.) Stopped eating smashed avocadoes?

Listen. Home ownership is one of the most stressful things to happen to you because you’re the only one responsible when your hot water tank leaks all over the kitchen and you get council rates on top of your phone bill and electricity bill and water bill and you have a huge hole in the wall from that time you tried to put up a painting and the brickwork was just like, not today! But when you come home to your own place at night and you get to hang wallpaper in the bathroom if you so choose and you can decide not to clean under the sink for a while and no one cares if you own a pet and occasionally you get this tremendous sense of security - it is honestly one of the things I am most grateful for in my life.

Here’s the bottom line. I, a millennial, can afford to own property because I’m middle class and I'm lucky. I got a middle class education and a middle class job that miraculously turned into a permanent position and I sponged off my middle class parents for a year and then borrowed even more money from them and now I live in a tiny box.

But by all means, blame avocado on toast.

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