Waddya mean, no?

Bruce Brammall, The West Australian, 9 August, 2021

Watching the never-ending generational warfare on property prices between Boomers and Millennials can be fun.

I’m Gen X and we were also tagged Slackers. So, it’s entertaining to see the “Smashed Avos” and the “OK Boomers” trading blows, from right in the middle … and not even trying to separate them.

But today, I’m picking sides. And some Millennials are wa-a-a-ay out of line.

A recent story from a Boomer couple. During the early days of Covid last year, their 26-year-old daughter lost her job.

Their Little Girl had been earning good money, but maybe had a spending problem (evidence by credit card debt). She was staying afloat. Until coronavirus deleted her job.

Sobbing, she came home for a Sunday roast. And begged. BOMAD, the Bank Of Mum And Dad, was open for lending. Along with budget assistance, they extended a $10,000 loan for immediate help with the plastic fantastic and set repayments at $100 a week for two years.

She found work and started repaying the debt.

For a little while.

When saving got lazy again and her budget got tighter (again), she cancelled the automatic BOMAD loan payment.

Then she and boyfriend decided they wanted to buy a house.

Like now.

Back she went to “BOMAD” for another Sunday roast. But this time, with a grander plan.

A mortgage broker had told them about “family equity guarantees”, where parents could risk equity in their home as collateral, so the kids could avoid actually saving a deposit and lenders mortgage insurance.

Gets around the problem of having only a tiny, even negative, deposit!

The kids even arranged for the broker to call BOMAD to assure them there was “no risk” in going guarantor.

Yes! Seriously! He called and said that!

They wanted my advice.

“So, you lent her $10,000. She agreed to pay $100 a week, but cancelled after a few months, because it wasn’t suiting her budget?” I asked.

They nodded.

“Then she and her boyfriend decided to buy a house. What, a month ago?”

More nods.

“No savings. Debts to you and credit cards. Clearly living beyond their means. Cancelled payment on a family debt because ‘it didn’t suit them. And now want you to risk the home you’ve nearly paid off so they don’t have to save a deposit?”

“Yes. Could you please chat to her? She’s pressuring us on the guarantor.”

I’m still waiting for Little Girl’s phone call.

I’m hearing this sort of story more often.

And my message is: “Millennials, dudes … some patience, please”.

You can’t just wake up one day and decide you’re going to buy your first home that afternoon. Or the following week/month.

You shouldn’t just go to Mum and Dad and ask them to risk everything they’ve worked hard for, as a guarantor, because you can’t wait to buy a home.

Some parents will want to help out. Some considerably. But it shouldn’t be expected. And you shouldn’t be disappointed if you’re told no.

Buying a home should take time to save and sacrifice. Potentially years, depending on how good you are at both.

I cut back a bit on pub and bands time and bought cheaper lunches. For others, maybe it’s making smashed avo at home. For older generations, it might have been darning old socks, instead of buying new ones.

Spend less on cars!

But the process has never changed. 1. Wake up one morning and decide to buy a home. 2. Make plenty of meaningful sacrifices, for a few years. 3. Buy home.

I once asked a group of about 40 thirty-somethings how many of them had bought a home. About half put their hand up. I then asked each of them how long it had taken them to go from step one to step three.

It ranged from about a year to four years, with the average being about 24 months. Work on that.

There is government assistance. First-home buyers generally get decent stamp duty concessions, “super” saver accounts, each of which is taxpayer money designed to help you out.

It’s not easy. And yeah, it’s a bitch that Boomers have done so well out of property in the last 30 years.

But property ownership is not a right. And definitely not a parental responsibility. You’re an adult. You get to make decisions/choices now.

Sacrifice, or don’t. But don’t make it your parents’ problem.

Bruce Brammall is the author of Mortgages Made Easy and is both a financial adviser and mortgage broker. E: bruce@brucebrammallfinancial.com.au.