Young Aussies stressed about money

An “alarming number” of young Australians are spending sleepless nights worrying about their financial position, and many refuse to ask for advice, a new report suggests. Yet, many young people are going online for answers.

A survey conducted by superannuation fund REST has revealed that many 18 to 30 year olds are worried about money and may not be properly educated about managing their finances, both in the short term and for longer term areas such as saving for a property.

Damien Hill, chief executive of REST, said of those currently receiving financial advice, 72 percent said they found useful. But, he says, many Generation Y Australians refuse to seek professional financial advice or ask family to help them budget or save.

“Considering such a high percentage of the young people we surveyed have never received any financial advice, it’s not surprising that they have ongoing financial worries,” he said. “We don’t want to see this generation overwhelmed by financial stress throughout the rest of their working lives, and through retirement.”

One in two respondents said they would not talk to a financial planner, and 72 percent said they would not ask family for budgeting, saving or investment advice.

REST also found that Gen Ys working full time were more likely to save for a major event such as a holiday or wedding, rather than a house.

Savvier than you think

Generation Y might have earned a reputation as being frivolous with their money and unwilling to ask for help managing it, but a separate study suggests they are savvier than you might think.

Latest research by RateCity shows that Generation Y is more likely to go online for information about financial products than any other generational group.

They are the most likely to search, compare and apply for financial products, and are highly active online when it comes to comparing and applying for insurance products. They also have fewer credit cards than any generational group.

Alex Parsons, chief executive of RateCity, said Gen Y is the most active group of online banking customers.

“They want to know more about financial products, how their products compare and are willing to switch financial institutions if they find a better value deal,” he said.

About 22 percent of the site’s 18 to 34-year old visitors were interested in personal loans, 16 percent intended to apply for a home loan in the next year and 9 percent wanted to secure a car loan within six months. Many were also actively looking at ways to invest their money and plan for the future.

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What is an ombudsman?

An complaints officer – previously referred to as an ombudsman -looks at formal complaints from customers about their credit providers, and helps to find a fair and independent solution to these problems.

These services are handled by the Australian Financial Complaints Authority, a non-profit government organisation that addresses and resolves financial disputes between customers and financial service providers.

What is a guarantor?

A guarantor is someone who provides a legally binding promise that they will pay off a mortgage if the principal borrower fails to do so.

Often, guarantors are parents in a solid financial position, while the principal borrower is a child in a weaker financial position who is struggling to enter the property market.

Lenders usually regard borrowers as less risky when they have a guarantor – and therefore may charge lower interest rates or even approve mortgages they would have otherwise rejected.

However, if the borrower falls behind on their repayments, the lender might chase the guarantor for payment. In some circumstances, the lender might even seize and sell the guarantor’s property to recoup their money.

How do I take out a low-deposit home loan?

If you want to take out a low-deposit home loan, it might be a good idea to consult a mortgage broker who can give you professional financial advice and organise the mortgage for you.

Another way to take out a low-deposit home loan is to do your own research with a comparison website like RateCity. Once you’ve identified your preferred mortgage, you can apply through RateCity or go direct to the lender.

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A failure to follow all or part of a contract or breaking the conditions of a contract without any legal excuse. A breach of contract can be material, minor, actual or anticipatory, depending on the severity of the breaches and their material impact.

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A mortgage default occurs when you are 90 days or more behind on your mortgage repayments. Late repayments will often incur a late fee on top of the amount owed which will continue to gather interest along with the remaining principal amount.

If you do default on a mortgage repayment you should try and catch up in next month’s payment. If this isn’t possible, and missing payments is going to become a regular issue, you need to contact your lender as soon as possible to organise an alternative payment schedule and discuss further options.

You may also want to talk to a financial counsellor. 

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