As young Australians look to fight the odds and take their first step onto the property ladder, more and more are making easy mistakes.

For some younger Australians, the possibility of being locked out of the country’s housing market is as much a fear as it is an opportunity.

A growing gulf between housing prices and wage growth has inspired many to jump into the market no matter the cost. However, a desperate rush into the market by younger investors has seen many mistakes made along the way.

one of the conventional wisdoms around property investment has quickly become one of the bigger misconceptions among younger Australian investors.

Most people who get into financial strife have either bought too much house or too much car.

Getting the right amount of house is the number one step where most people get carried away.

In the early ’80s, buying the biggest house you can afford was generally the way to go because inflation would cover the cost sooner rather than later. However, he said that the same advice doesn’t necessarily make the most sense in today’s market.

But how should younger Australians determine what the right amount of house looks like? They should look at what they can buy for around five-to-six times their income or four-to-five times their income, if they’re on a lower wage.

If you overdo it, you’re going to have to spend a lot of time cutting back.

The second misconception that younger Australians have about home loans, is the belief that they need a 20 per cent deposit. You don’t necessarily need this as you can apply for lenders mortgage insurance but be warned – its expensive and its protecting the lender, not you!

So what should young Australians should be looking for in their home loan provider? Don’t focus too much on big-ticket things like price or rate. You need to think more about the ways in which their income might be non-standard.

If you depend on commission or bonuses or casual income or if you’ve got some income outside your job or you’re self-employed, the bank’s policies around how they assess that income in determining how much they’ll lend you is actually much more important than the rate.

Very little of this policy information is made public.

How long is it going to take them to give you an approval, and is the pre-approval they’re going to give you an actual assessment or is it just plugged into a calculator? Those three things are way more important than the price or the colour of the credit card you’re going to get.

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