First home buyers struggling to pay the mortgage

It’s a choice between struggling now, or in retirement.

First home buyers around Australia are taking the plunge and tackling a mortgage — even if it means making many sacrifices — rather than sitting on the sidelines.

Jessica Lemmon and husband Joel were lucky enough to have their parents go guarantor on their loan.

But they still needed $25,000 in the bank to buy their $500,000 three-bedroom house in Amaroo.

The couple pays $1890 each month to rent a similar property in Ngunnawal, and will have to stretch themselves further to make their $2400 monthly mortgage repayments.

Mrs Lemmon, 25, said they couldn’t have taken out the mortgage without the help of her father; they were looking at saving a deposit of up to $100,000.

The property manager is on maternity leave and will have to go back to work early.

“I was planning on taking the full 12 months off, but I don’t really think I can do that anymore,” she said.

“I’m losing sleep as it is now because I’m so scared of having to pay so much more money when it’s really not very affordable.”

Financial advisors say getting a foothold on the property ladder, taking away the burden of paying rent, could protect buyers in retirement.

But the average first home buyer’s home loan has been on the increase, and those who bought this year, rather than last year, had to borrow an extra $9067 — which equates to nearly $175 every week, the latest Adelaide Bank/Real Estate Institute of Australia housing affordability report shows.

With the deposit hurdle creeping higher every year, many first home buyers are opting to buy a property before saving a full 20 per cent deposit, even if it means footing lenders mortgage insurance.

An average Australia first-timer who waited another year to buy had to borrow an extra $9067.

New South Wales and Victoria experienced the biggest increase in average first-home-buyer loans over the year to March.

In Canberra, the average first-home buyer loan has increased to $338,300 – the highest since the $355,000 recorded over December last year.

After taking on the new responsibility, Mrs Lemmon accepts her whole lifestyle will change.

The couple has already cancelled Foxtel, and may not be able to eat out on the weekends or go on overseas trips.

“At the moment we pay all our bills and you don’t really stress about money,” she said.

“I don’t have a budget, I don’t plan — I just pay my bills and then I have money left over and I can do what I want with it.

“But now, it’s not going to be like that at all.”