Jared and Nick met at trade school and immediately became best mates. As first-year apprentices earning minimum wages and still living at home, each wondered how they’d ever afford to buy a place of their own.
Australia’s property market is challenging, but for young people just starting out, it can be totally demoralising.
While Jared and Nick would be able to afford rental payments, neither could see themselves scraping a home deposit together.
One day during lunch at trade school, their teacher overheard them lamenting the current housing climate and suggested they consider a scheme known as rent-to-buy. He explained that it’s an arrangement they could undertake in partnership. In fact, his daughter had co-purchased her first home through a rent-to-buy plan with her cousin.
Intrigued, the boys met with a mortgage broker to understand rent-to-buy and how it might work for them.
In a nutshell, rent-to-buy is a rental agreement that offers the option to purchase the property at a later date.
It works like this:
Jared and Nick thought the scheme could work for them, however their mortgage broker was quick to point out the pros and the cons of a rent-to-buy arrangement.
PRO’S
CON’S
Ultimately, Jared and Nick went ahead with the scheme, renting a small 3-bedroom house close to schools and transport. They envisaged finalising their purchase three years later, once they’d completed their apprenticeships and were earning higher wages.
Looking further down the track, their little house would work well as a future investment property.
The boys had taken all the right steps. They’d spoken to legal and financial professionals, chosen a suitable property, made a plan and stuck to it.
As a result, by 22 years of age, Jared and Nick were homeowners, proving that with advice, a strategy and know-how, you’re never too young to begin planning your financial future.
