September 30, 2013
Recently we met a very switched on 22 year-old client who, with a considerable deposit saved from years of part time earnings, was well positioned to buy his first home.
Like many young people today, Kid X came straight to a mortgage broker believing that despite his understanding of the property market and his financial preparation, he was still nowhere near knowledgeable enough to find the best deal out there. Nor did he want to go it alone.
"I'm not going to pull my own teeth even though I know where to find them," Kid X quipped when asked why he'd chosen us.
Assured that we'd make the process of buying a first home totally painless, Kid X went ahead with what seemed like a straightforward application that should have been problem free.
Imagine his surprise however when we had to inform him that his chosen lenders were uneasy about approving his finance because of his credit history.
'Ah, credit default,' you may say, thinking he's probably missed a payment somewhere down the track in his study years, for a mobuie phone or a car perhaps? It's quite common.
But you'd be wrong.
Kid X had learned from his parents that he should save first and spend later. He didn't own a credit card.
Admirable and responsible..but very suspicious in Lender Land apparently, where a no credit history can be as complicated as a bad one.
Kid X got himself some plastic quick smart and we're happy to say we helped him overcome the obstacle to get him into that first home.
But the lesson to be learned is this... the current generation of 16 years plus kids - many of whom have been working and saving money earned from part-time jobs since they were in Year 9 - are being sold short when it comes to relevant and practical education about managing their finances in the modern world.
They deserve better.
Think of what they could do to optimise their wealth and financial futures if someone would just give them a heads up.
There's no HSC in Practical Finance Management. No modules on responsible credit; building wealth through property; getting on the property ladder early; insuring yourself as your biggest asset, building Super and SMSFs, or retiring to live, not just survive.
So it's down to you, the parents of our teens. And if our notice to teenagers image rings a big bell then you'll be pleased to know that you can make it happen sooner if you teach your kids how.
We can help. Peter Johnson and Nathan Smith are experienced in giving parents practical information and advice about what their kids should do to prepare themselves for eventually buying that first home. They've also helped many young clients achieve this goal and set them on the path to their next property investment.
Alternatively, with Maureen's 25 years experience as a high school teacher, Mortgage Choice at Sutherland are happy to run some brief, free seminars for parents, staff and students at your local school's PT evening or at our office.
Give us a call on 9521 1611 to discuss the service further.