Buying Your First Home – Is It Possible & Why Should I?
Nearly every week in the news there is a story on buying your first home. TV segments and articles with headlines like “It’s impossible for Gen Y to afford to buy their own home and always will be” or “Stop your whining, I have bought a property! Let me tell you how.”
So what is the real story behind these bulletins?
The reality is buying your first home won’t be easy, as the first major hurdle is saving the deposit.
A 20% deposit seems unreachable but it is achievable if you make some sacrifices with your financial priorities. Ask yourself some questions before spending. Is that new phone really worth the $300 dollar upgrade? Or is your current phone perfectly fine for now. Do you need to spend money on brand items when a cheaper alternative may suit your needs for now? Forgoing some of the small things will all add up. Once you have set your sights on your goal, you will begin to feel satisfaction with every step towards your first home.
We often hear from young people “why should I buy my first home? I don’t want to be locked into a 25-year commitment!” Here are a few reasons why you should ditch renting and buy your first place.
- Rent equals financial commitment - Whether you like it or not you have to live somewhere. The real estate agent will always want the rent paid on time and not in arrears and typically these leases are yearlong commitments. When you pay rent, you are helping someone else get ahead. Why not help yourself? Every mortgage payment you complete (assuming P&I is applied) you are growing your wealth by creating distance between your house value and your mortgage amount.
- Roommates can help lighten the load - In this day and age you can find people to fill a room with relative ease through sites such as Gumtree and Airbnb. If you are not into strangers living with you, finding a friend or family member to live with you is always an alternative. Having roommates can relieve yourself of some financial strain and subsequently help you pay more off your mortgage each month. Every little bit helps and the extra money does not necessarily need to go off your mortgage, for example, it can help with your basic living expenses.
- Want to travel? Rent/house sitting - Being a young person usually means a sense freedom and a longing to travel. Don’t let buying property get in the way of that. You can always rent out your property for a set time period such as 6 to 12 month period to cover the costs while you travel and then move back in once you have returned from your travels. Now, is this extra work? Yes. Organising a tenant through a realtor may take time and effort but would be financial rewarding. Alternatively, you could find a family member or friend to house sit while you were away for a certain fee.
Even with the above in mind, buying your first home can be stressful but also rewarding. Finding the right balance between the financial commitment and lifestyle is key. Seeking professional advice before your purchase is always advisable and helps ensure you make an informed decision.