Parents help Melbourne 20-year-old buy first home worth $373,000

Lucia Milne has just landed her first home in Melbourne, despite skyrocketing house prices. This is how she pulled it off.

At just 20 years old, Lucia Milne is the proud owner of her first home in Melbourne.

She snapped up a one-bedroom apartment in Footscray for $373,400, admitting it has been a stressful process but also very exciting.

But with the news that house prices have been reaching eye-watering heights, how did someone achieve the Aussie dream at such a young age?

The Melbourne local, who is currently studying biomedicine, said she has been working three or four jobs at a time since she was 16, but was helped by the bank of mum and dad to buy her house.

Her parents - who contributed a five-figure amount - wanted to give her the opportunity to get a foot on the property ladder.

“My grandmother passed away and left a small sum of money – it wasn’t a lot but enough to pay for deposit,” she told news.com.au.

“Mum and dad said they would rather set me up with a future and give me mortgage history and why pay rent when I can pay off a mortgage, which was incredibly generous and incredibly kind of them. We are not an affluent family at all, mum and dad work hard and always have.”

The bank of mum and dad is now the ninth largest mortgage ‘lender’ – lending or giving $29 billion in the past 12 months, according to Finder.

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Lucia with her grandmother, who was an architect, said she would be proud to help out her grandkids. Picture: Supplied

Finder research found one in three first-home buyers rely on their parents for financial help with the deposit or ongoing repayments. That’s the equivalent of more than 3700 Aussie adults per month relying on their parents for housing costs.

Millennials are the most likely to have asked their parents for help with the loan too.

Ms Milne, who is works two part time jobs as a barista and administration assistant, is currently renting in a share house but said there isn’t a big difference when it comes to paying off the mortgage.

“It’s about the same. I am paying $250 a week in rent and I think the mortgage is $1080 a month so it’s a small difference which is why we made the decision, because the deal that I got is set three years at the same interest rate,” she said. “It made sense to be paying that when I had been paying that in rent anyway.”

Ms Milne said it feels “surreal” to be a homeowner and the first week in her apartment – which she is due to move into in May – will be a dream.

“It’s very exciting and very daunting. I have moments where I pinch myself and think ‘Oh gawd I have a mortgage’. I’m very grateful and I’m very aware not everyone has the opportunity and I don’t want to take away from fact of how lucky I am,” she said.

“My grandmother was an architect and she would be very proud and she wouldn’t have wanted her money to go anywhere else. She was strong, independent woman, who would have wanted her small sum of money to help her grandkids.”

With the increasing cost of living, as well as soaring house prices, Ms Milne thinks more and more kids will be leaning on their parents to help out with a home deposit. It’s a conversation she is having with her friends “all the time”.

“I think we all joke how are we ever going to buy a house because life is so expensive. We all have cars and rent, most of my friends are studying, so we only have so many hours that we can work and if you’re studying and working its just a lot,” she revealed. “It’s definitely a big conversation. I have a couple of mates that one of their primary goals is to buy a house.”

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Melbourne house prices could hit $1 million by Christmas if the increase in property values continues. Picture: The Advertiser

Sarah Megginson, home loans expert at Finder, said saving for a deposit is still one of the biggest struggles for those looking to take their first step on to the property ladder, especially if you’re paying rent at the same time.

“In light of last year’s events, it’s not surprising to see this many parents helping their children get their foot in the door,” she said.

“With property prices showing no signs of slowing down, and interest rates at an all-time low, it seems many parents feel a responsibility to give their kids a financial leg up, no matter how much of an impact it has on them personally.”

Men are more likely to have received parental contributions, with 36 per cent dipping into the bank of mum and dad, compared to 27 per cent of women, Finder’s research found.

Ms Megginson said it’s essential that parents teach their kids how to handle money responsibly as well.

“Buying a home is a huge responsibility, it’s much more than swapping rent for a mortgage payment. There’s also council rates and water levies, strata levies and insurance, plus the cost of repairs when something breaks,” she said.

“You can’t rely on mum and dad to come to the rescue on an ongoing basis so I’d encourage all parents to teach their kids basic money management skills. Teach them how to save, how to compare bank accounts and how to set up their own emergency fund.”

She advised that too much generosity from parents’ could hurt their own standard of living in retirement.

“Supporting your kids is how many see the job of a parent, but mum and dad need to make sure they aren’t leaving themselves vulnerable in the process,” she said.