How staying at home can cut years off the length of time to save a deposit

First-home buyers who are able to stay at home rent-free can cut down the time it would take to save a 20 per cent deposit by a year and a half, new research shows.

In some states the benefit is even higher because of the cost of rent slashing the length of time to save a deposit from more than five years to less than three, according to data analysed by comparison site Canstar.

The calculations are based on average incomes, first-home buyer loan sizes and living costs by state. They also include parents covering rent, utilities, internet and groceries.

In NSW it would someone who was living at home 31 months to save for an average 20 per cent deposit. If they were renting it would take double the time – 63 months.

In Victoria it would take 29 months to save for a deposit while living at home, compared to 49 months if you had to pay rent.



While this often isn’t seen as using the “bank of mum and dad” – a term normally reserved for cash gifts or guarantor loans – it’s a form of assistance that has become “more critical than ever”, Canstar group executive of financial services Steve Mickenbecker​ says.

With these savings available, it’s little surprise more young Australians are taking longer to fly the nest.

A recent analysis of census data found 114,000 people aged 25 to 34 in Sydney were still living in the family home in 2016.

“Parents have paid the bills for 18 years. Continuing for a further three years is worth it, to see the children establish their viable long-term independence,” Mr Mickenbecker says.

“Where the family just can’t work it through, the young adult just has to accept that it will take longer and take steps to accelerate saving.”

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These steps could include renting in a share house and reducing discretionary spending. 

But even doing this will leave most first-home buyers a year behind those who are able to spend longer at home, First Home Buyers Australia co-founder Taj Singh says.

He has seen a 50/50 split in first-home buyers looking for assistance with saving, and said they “have definitely found that those who live at home have access to a higher deposit than those who have been renting prior to purchasing their first home”.

“With a large number of baby boomers living in houses which are too big for them … parents may be happy to accommodate their kids for a longer period of time.”

With rent in many capitals totalling thousands of dollars a year, even paying a modest rate of board at home will still give savers a leg-up, he says.

Another technique being taken up by Gen Y home buyers is buying a home under $650,000, obtaining the first-home owners’ grant and moving into the property for the required six months and then moving back home,  VJR & Associates and Keshab Chartered Accountants accountant Jeremy Iannuzzelli​ says.

At this point, the home becomes an investment property – with the rent covering some of the mortgage repayment – and the young buyer can chop their expenses by living with their parents.

Often, it’s couples and young families who are moving back home to afford their mortgage.

“A $650,000 mortgage on principal and interest [repayments] are $1000 a week – it’s a lot of money … people beg, borrow and steal to get it down to a comfortable amount,” he says.

“Renting it out means it’s $450 a week versus $1000 a week, and they can continue to knock down the mortgage with any additional cash.

“You can also [make tax deductions] on the council and water rates.”