Tips To Buy A Home On Your Own
It’s increasingly difficult for the average income earner to buy a home on their own but Funding Options managing Director Dom Cassisi has tips for those who want to go solo.
The average price for homes in capital cities require monthly repayments which, assuming they eat up a third of one’s income, could only be afforded with a six-figure annual income.
Is that a lot to swallow, or what?
Here’s a few tips to help you take advantage of today’s low interest rates on home loans.
When trying to buy a home while single, the most important thing is to be realistic.
Couples who buy a home together have two incomes to help ease the cost of purchase. Not to mention, they can share daily living expenses. You don’t have that kind of support at this time. While this doesn’t doom your dreams to failure, it’s critical that you accept your limitations.
Take a realistic look at your budget. Remember that you aren’t just saving up for the deposit – there are thousands of dollars to be spent on fees, inspections, stamp duty and so on.
Get pre-approval for a home loan so that you have a better idea of what you can afford to borrow.
Expect the unexpected. Without a spouse’s income to fall back on, you could find yourself in hot water should you suddenly get injured or ill or lose your job. Think seriously about having the proper insurances in place to protect your income and assets.
Be willing to compromise, a bit. There’s no shame in settling for a smaller property if it helps you get your feet wet in the housing market. Your wealth will grow with time, and you’ll be one step closer to affording the home of your dreams.
Speaking of time, you should also accept the fact that it will probably take you a while to save up for the deposit on your ideal home.
You can save yourself some time by trying out some of the following methods.
Eliminate Expenses, Increase Income
To get your savings as close as possible to your goal, make every effort to set aside spare dollars. This may require some drastic lifestyle changes.
For example, you can cut out your current rent cost by moving in with family or friends for a nominal boarding expense. Sell your vehicle in favour of using public transportation. Take on a second job, start up a side business or increase your employee value by taking additional training.
Search for ways to save on clothing, entertainment bills and eating out.
Some of these changes might seem unpleasant to consider. But you have to decide between having a comfortable lifestyle now or being able to own your dream home. Some short-term sacrifices are worth the rewards!
Split The Cost
The increasingly popular method of pooling resources to purchase a home may be right for you. Talk with friends and siblings about going in together on the cost of a property. It is of course crucial to be careful who you invest with, and you should always seek advice from your financial planner, accountant and mortgage broker.
If the idea of sitting around and waiting for savings to accumulate doesn’t appeal to your limited patience, try the indirect but proactive approach of reinvesting.
Very simplistically, the process goes a little something like this:
– Rent your ideal property (instead of trying to purchase)
– Purchase a smaller, more affordable property
– Rent out the smaller property
– Use rental income to cover your own rental costs
– Sell the smaller property for capital gain to bulk out your property portfolio
The benefit to this method is that you can break into the market without compromising on your dream home. You get to enjoy living in it, but put the joy of ownership temporarily on hold as you work on increasing your wealth.
Ask Parents To Go Guarantor
It’s usually easier to get a loan when mum and dad agree to use their own home as security. Going guarantor potentially puts them in a situation of some financial risk, the level of which will vary depending on your personal circumstances, but they may be willing to help you realise your home ownership goal. Guarantor loans are becoming increasingly common as the market becomes more challenging for people to break into.
You’re going to need expert help on the line if you want help buying a home solo. Contact Funding Options today for a no obligations discussion about your needs, and see how our experts can help make your home ownership dream a success.
– Dom Cassisi, Managing Director