When a builder started talking about “house frontage”, 23-year-old Celestine Robinson thought to herself: “I knew I was out of my depth.”
Celestine and her partner, Dean Morris, had recently started looking at buying a house and land package in Perth.
They eventually decided not to go ahead, but the experience exposed just how much they did not know about buying their first home.
“Buying my first home here in Perth scares me due to the latest market booms and interest hikes,” Celestine said.
“I feel nervous even thinking about mortgage repayments and what my financial future would look like if I buy a home.”
Growing up in Kununurra, Celestine said she was never taught about home loans or mortgage repayments.
Her parents encouraged her to save money from casual jobs while she was at school, giving her a head start on a future deposit.
However, when it came to terms such as lenders mortgage insurance, stamp duty, council rates and first home buyer assistance, she said she “knew next to nothing”.
“The only thing I knew regarding a mortgage, house deposits and banks was that I need to save a 20 percent deposit and that I would need to ‘pay a mortgage’ once I purchased a home,” she said.
Dean, also 23, had a similar experience. He initially thought buying was largely a matter of having enough savings for a deposit and applying to a bank based on his salary.
It was only when he and Celestine started looking seriously that he began learning about different lenders, interest rates, loan types, fees and borrowing capacity.
“I wish someone just taught us the basics of living, understanding what the real world looks like,” Dean said.
“It would have been helpful to learn about setting financial goals, the importance of saving early and the impact of interest rates on loans.”
Dean does, however, have one advantage many young buyers do not.
His mother, Thornlie resident Liran Morris, is a mortgage broker and previously worked as a real estate agent and ran a property development business.
Liran said conversations with her son, his friends and first home buyers convinced her that many young people were reaching adulthood without understanding some of the basics involved in buying property.
She has since created Home Lender Hub, a free online resource covering topics including borrowing, repayments, budgeting, credit history and government assistance.
Liran said the idea was reinforced after a first home buyer contacted her believing home ownership was still years away.
After looking at the buyer’s circumstances, Liran said she was pre-approved within days and later had an offer accepted.
She stressed that the same outcome or timeframe would not apply to everyone, but said the experience showed why asking questions early could be useful.
“She could easily have carried on believing there was nothing she could do yet,” Liran said.
“That made me think about my son. He has someone close to him who can explain mortgages, but not everyone does.”
Liran believes financial education should begin before young people reach the point of applying for a home loan.
She would like schools to cover budgeting, income, expenses and interest, as well as basic information about mortgages and the different professionals involved in buying property.
She said better education could not solve housing affordability or remove cost-of-living pressures, but could help young people understand their options and prepare earlier.
Dean said having his mother available to answer questions had changed how he viewed his own prospects.
“I don’t think I would have anywhere near the knowledge that I do now if I didn’t have someone to easily ask questions,” he said.
“I think without her support I would not have considered buying as something that is within my reach.”
Celestine said the couple’s decision not to proceed with the house and land package had still left her better prepared for the next time they considered buying.
She also believes financial education needs to start well before buying a home is on a teenager’s mind.
“Even though at 16 years old, you won’t be considering buying a home or anywhere near it, this would help to ensure you have a head start for when you do decide to enter the property market,” she said.
Liran is also discussing the possibility of holding a free first home buyer workshop in the local community with Gosnells Mayor Terresa Lynes.
As for Dean and Celestine, buying a home remains something they are considering rather than rushing into.
This time, at least, terms such as deposits, repayments and LMI no longer sound quite as unfamiliar.
