4 May 2017

Baby Steps Towards Your New Home

We are living in an age where more younger people are renting rather than being able to afford their own home. Inflation in house prices has meant a massive spike that a lot of us just can’t reach, even after saving for years. Unfortunately wages haven’t risen at the same rate that house prices have, meaning that we are spending years reaching out after something that is seemingly getting further and further away from our grasp. Unless we have been given a set amount to put towards our first home, whether it’s an apartment or luxury villa, there is little chance that we will be able to hop straight onto the property ladder. So how do we even start to put our first foot forward on the rung?


Go With What You Can Afford
It’s always good to have a ballpark figure of what you can afford to buy in your head. This is usually four and a half times the amount of what you earn plus whatever deposit you can put on top of that - that’s what most mortgage lenders are willing to provide to you. Don’t just think of the cost of the house initially, but whether you will be able to afford the repayments back each month. It can be a huge chunk out of what you’re earning, especially if it’s a sole income that it’s coming out of. Learning to budget before you buy can be an amazing thing to do so you know how you will be able to live and afford paying out for your mortgage - lifestyle changes may need to happen in order for you to do this, but the slower you work your way into them, the less you’ll grow to resent them (as would be the case if they were happening instantly). Smaller houses generally command smaller prices, and searching in neighbourhoods which aren’t popular could see you moving towards your dream home in less time than originally anticipated; you can get the same house in a differing neighbourhood for a fraction of the price that you would be spending in a neighbourhood where the competition for houses is a bit more fierce. A home is what you make it, and once you close the door you don’t necessarily have to take a look at the outside of the house. A lot of places get a bad reputation from things that had happened there a number of years ago; don’t let this put you off from making the decision to purchase now if it offers a competitive price. 

Save, Save, Save
The more you try and save each month, the less it’ll work out in your benefit - unless you can be one hundred percent certain that you won’t be missing it. If bills are being missed in order to save or you’re forgoing other important things in your life, this will only have a negative effect on your saving goals … especially if you’re having to repay a debt that could have been avoided. It’s better to put away a little bit away each month that you know you won’t miss. It’s hard to know what you will and won’t miss until you start squirreling it away, but start at a reasonable amount that you know you would be spending on other things that can easily be missed, such as take outs or trips to the cinema. Try and put into an account which isn’t accessible to you or convenient for you to withdraw from; that way, there is less chance of you being more inclined to take money from it when the going gets tough. It’s wise to think back on why you are saving your money and look forward to the future and what it’s got to offer with you putting this money to one side. 

Look For Deals 
Whether it’s with a bank or a mortgage lender, there will always be deals on offer - it’s just about being able to source them and find them to utilise. There are comparison sites available online which take into account everything that you need to know. Advanced calculators are situated on these sites which mull over all of your outgoings and the income that will be placed into your bank account each month, and correlate this with the best home loan providers and deals for you to take advantage of. In terms of saving, you will need a bank account which offers a high interest rate for a short amount of time. There’s a certain amount of moving about in bank accounts that you can do in order to get the deals which come with having a new account with the provider that you have chosen; it could be free home insurance for a year, an advanced high rate of interest for you to utilise or even 


Consider Purchasing With Another Person
The person doesn’t necessarily have to live with you in order for you to be able to go forth and purchase your new home. Parents, grandparents, even friends who just want a stake in property and for them to be able to invest their money into something physical which could turn into accumulation, rather than sitting in a bank with a dormant APR rate, is the best thing that most millennials could wish to hear when purchasing a house. It is essentially a safe investment for them, as long as you are willing to sit tight for a few years. It could be that if and when they want to pull out on their part of the deal, you will be in the position financially to be able to buy them out. While this is something that can take a lot of time to achieve, it is a way of getting yourself in the house and on the property ladder without having to save up for even longer and reach a certain part in your career (ie a higher salary) to be able to achieve a mortgage. And yes, that’s right - it’s really about achieving a mortgage, as nowadays like it’s a big competition. There are so many hoops to jump through that it’s a thing to congratulate yourself on once it’s completed. 

See What Schemes Are Available 
Depending on what country you are living in, the government could have provided a scheme for you to take part in if you fit certain criteria. For example, in the United Kingdom, there is a ‘Help To Buy’ scheme where investments made into an ISA can be added to with a grant from the government - but this is only on new build homes for first-time buyers. There are a lot of boxes to tick to get to this stage and, generally speaking, there will be across the world too. It’s not an easy way to get onto the property ladder, but it’s certainly an easier way provided that it’s a new build home that you want and that you are a first time buyer explicitly. Taking baby steps towards your first home could mean that you’re taking steps towards a baby home in terms of age. This isn’t a bad thing; there are things to take into consideration when buying a new home such as the fact that it’s essentially under warranty for a couple of years and there are chances to get snags fixed easily. There is also the added bonus of new build homes increasing in value a lot more quickly than houses that have stood around for longer than ten years.

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