Why everyone in their 20s doesn’t need to own a home right now

Roommates sharing a pizza in their rental home.

FOMO in the property market can be very real. Whether housing is seeing a price boom or bust, first home buyers may feel the urge to ‘get in’ before prices skyrocket, which could see them sacrificing value or must-haves on a property checklist. 

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And while some 20-somethings may be in a financial position to buy their first home, it isn’t a requirement for everyone in this age bracket. So, let’s explore how owning a home can impact your budget and lifestyle, and why renting isn’t always a dirty word.  

The costs behind buying and owning a home

The massive amount that’s required to purchase property – which has been on the rise for the last six months – is the headline cost most people think about when considering home ownership. But there are a bunch of other bills connected to buying and maintaining a home, including:

  • Home loan costs, which can include legal fees when you take out a mortgage, as well as ongoing administrative fees and, of course, the ongoing cost of interest rates applied to loan repayments.
  • Fees and taxes. While there are some concessions for first home buyers in certain states, stamp duty (aka transfer duty) can be another cost you need to pay when purchasing property. Land tax could also come into the equation if the value of the property is over a certain amount and you fit in a specific buyer category (again, this differs between states and territories). Then, if you’re purchasing an apartment you’ll need to budget for ongoing strata fees for the management of communal areas. 
  • Maintenance costs will come up at some point with every property type, whether it’s a brand new build or an older fixer-upper. While these costs may only be on-offs or minimal, you’ll want to pad your savings with some wiggle room in case these things are more costly than you anticipate.
  • Home insurance can help mitigate some maintenance costs if damages fall within an insurable event, but your annual home and contents insurance premium can be costly in itself. Despite this, you’ll want a policy that can help protect your property in an emergency and ensure you’re not left with a massive repair bill, so check out this guide to what you need to know about insuring your first home.     

The benefits of renting

It’s a pretty special experience owning your own home and there are plenty of financial and personal benefits to owning property if you make an astute purchase. But if you’re in the right stage of life and frame of mind, renting also has its advantages. 

Many people in their 20s are celebrating their final years of study and starting out on exciting career trajectories. You might be letting the workforce winds carry you to new towns and cities, having a blast living and partying with friends, or experimenting sharing your space with a new love interest.

Flexible renting arrangements are an ideal setting for all of these circumstances as it’s usually a lot easier to break a lease than sell a house, even if you do get slapped with a fee.

And as we’ve mentioned, you’re not responsible for property upkeep or taxes for your rental like you are if you own a house or apartment. This could be very appealing if you’re on a shoe-string budget or looking to funnel your savings toward other adventures on your 20-somethings bucket list.    

High property prices mean a larger deposit

Many banks and lenders now offer home loans to people with deposits well below the traditional 20% value mark. While this means you’re able to get into the property market sooner, low deposit mortgages do come with risks

On average, borrowers with a higher loan-to-value-ratio or LVR (which is the percentage of a property’s value you still owe to the lender) will be offered slightly higher interest rates. In combination with larger loan repayments or longer loan terms, this can represent a significant sum over the life of a mortgage.

Buyers may also need to consider the cost of lenders mortgage insurance (LMI), which is an additional fee banks and lenders can charge as a kind of security if you don’t meet their deposit requirements. 

You can sometimes get around this by getting a personal guarantor who puts up their own assets (like a house) as collateral for your loan. Another option is to apply for financial support schemes where the government fills the guarantor’s shoes. And while some banks are scrapping LMI to encourage more borrowers, it’s important to remember taking out a home loan can involve additional, less obvious costs as we’ve already outlined. 

So, when you’re teetering on the edge of what is probably the largest purchase you’ve made in your life, the best advice is to not rush in.

First home buyer support is available, but there are conditions

There are numerous government schemes currently available to prospective first-time buyers which could make home ownership more attainable. However, most come with strict conditions, are only offered through specific lenders and are often capped to a certain number of applicants. 

Be sure to read all the details in Mozo’s guides about these government support measures below to see if you’re eligible:

  • First Home Loan Deposit Scheme: This is the scheme where the government acts as a guarantor so you can avoid paying LMI if you have a deposit between 5% and 20%. As part of the Federal Budget, another 10,000 places were made available for newly built homes and another 10,000 for existing residential properties from July 2021.
  • Family Home Guarantee: Similarly, this 2021 Budget initiative will relieve the burden of paying LMI, this time for borrowers with a deposit as low as 2%. It is only available to single parents on an annual taxable income below $125,000, and while it isn’t exclusively for first home buyers, many in this category may fit the criteria. There are 10,000 applications available from July 2021. 
  • First Home Owners Grant: When it was introduced in 2000 this scheme offered substantial lump sums to prospective first home buyers, but it’s now limited to those purchasing a new or significantly renovated home of a certain value. Buyer criteria and the grant amount differs between the states and territories, but you’re generally looking at a lump sum between $10,000 and $20,000 if you fit the bill.
  • First Home Super Saver Scheme: This allows first home buyers to save for a deposit via their superannuation funds, where they’ll be taxed at a lower rate and earn better interest than a bank or savings account. Savers can make up to $15,000 in voluntary contributions each year (to a total cap of $50,000) which they can then withdraw for the specific purpose of purchasing property. 

If you feel fully prepared and ready to jump into the property market, start researching home loans with the options below.

Home loan comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 473 home loans.
Last updated 21 June 2024 Important disclosures and comparison rate warning*
  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

  • Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Discount Variable Home Loan

    • Owner Occupier
    • LVR<70%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.01 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    A low rate home loan for owner-occupiers packed with great features including unlimited extra repayments, free online redraw, no application or monthly admin fees. Rate will vary depending on LVR. Winner of a Mozo Experts Choice 2024 Low Cost Home Loan Award^

  • Variable Home Loan 90

    • Principal and Interest
    • LVR <90%
    Interest rate
    6.04 % p.a.
    Variable
    Comparison rate
    6.06 % p.a.
    Initial monthly repayment
    $3,011
    Go to site

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

  • Fixed Rate Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <80%
    Interest rate
    6.09 % p.a.
    Fixed 3 years
    Comparison rate
    6.15 % p.a.
    Initial monthly repayment
    $3,027

    Additional repayments of up to $10K per fixed year. Interest rate discounts available. Waiver of $499 application fee when combined with an Orange Advantage Home Loan.

  • The Better Home Loan Special Offer

    • Owner Occupier
    • Principal & Interest
    • LVR<80%
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.14 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a variable rate home loan with a bunch of features from Police Credit Union. Make extra repayments at any time without penalty. No monthly, annual or upfront fees. Free online redraw. Minimum 20% deposit. Qualifying criteria applies. Minimum loan amount is 200K. For new customers only. Mozo Experts Choice Home Lender Credit Union of the Year 2023.

  • Basic Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Enjoy a low rate home loan with $0 application fee and $0 ongoing fees. Flexibility to split your loan and set different repayment types. Fee free redraw from your loan using online banking. Flexible ways to repay. 40% Deposit required.

  • Mortgage Simplifier

    • LVR<80%
    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.17 % p.a.
    Initial monthly repayment
    $3,043

    Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws.

  • Offset Home Loan

    • Owner Occupier
    • LVR<60%
    • Principal & Interest
    Interest rate
    6.14 % p.a.
    Variable
    Comparison rate
    6.39 % p.a.
    Initial monthly repayment
    $3,043
    Go to site

    Ability to open up to 10 offset accounts per loan account. Fast online application. Linked Debit Mastercard® with fee-free access at ATMs across Australia. Package a credit card with your home loan and the annual card fee will be waived (T&Cs apply). 40% deposit required.

  • Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

  • Offset Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <70%
    Interest rate
    6.25 % p.a.
    Fixed 3 years
    Comparison rate
    6.42 % p.a.
    Initial monthly repayment
    $3,079
    Go to site

  • Fixed Rate

    • Owner Occupier
    • Principal & Interest
    • <80% LVR
    Interest rate
    6.59 % p.a.
    Fixed 3 years
    Comparison rate
    7.06 % p.a.
    Initial monthly repayment
    $3,190

    Enjoy up to $3000 cashback for eligible first home buyers and $2000 cashback for refinancers on eligible home loans with the ANZ Fixed Rate Home Loan. Get the security of repayment certainty with a competitive locked in rate. No ongoing fees to pay. Offset account on 1-year fixed loans ($10/month fee applies). Interest-only payments allowed.

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.