Buying a home is considered one of the most important milestones in a young person’s life, along with getting married and starting a family. There are many reasons you may wish to buy your own home. You may want to lay down roots, have the stability of a property, be near to your support network or invest in your future.
Buying a home before the age of 30 is becoming increasingly difficult. If this is your goal, it is vital to plan appropriately and be prepared to make some sacrifices to achieve it. This article will explain some of the ways that you can buy a property before the age of 30.
Save A Significant Down Payment
The larger the down payment you have saved, the better terms you will get on a mortgage. If buying a home before 30 is your priority, then you should start saving as much as you can for a down payment as soon as you enter the workforce.
You will usually be able to get a mortgage with a deposit of at least 10%. Aiming to save up to 20% for a down payment can significantly reduce the amount you will pay in interest over time and give you far more options for mortgages.
Automate Your Savings
Automating your savings can ensure that you don’t accidentally eat into your down payment during the month. You should set up an automatic transfer for your savings so that as soon as you’re paid, the money you’re saving is moved to a separate account. At the end of the month, any remaining money can also be transferred to your savings account.
It is a good idea to find a high-interest savings account to help you get the most out of your money. Look for a savings account that offers at least 1% interest on funds deposited. The more money you add to your savings account, the more you will earn over time.
Consider Various Locations
It can be beneficial to look at various locations when searching for your first property. Property in more affluent and desirable areas will be more costly, so looking at more remote or up and coming areas could help you save significantly.
Once you have decided which area or city you want to purchase property in, you can narrow down the different neighbourhoods. It is a good idea at this point to consider your particular needs and where your support system is based to find the right balance of value for money and practical considerations.
Ensure You Have A Good Emergency Fund
An emergency fund is crucial for anyone regardless of their homeownership status. Ideally, you should have a cushion of six months’ pay to use in case of emergency. If you don’t yet have that much of a buffer, it is a good idea to delay buying your home until you have more funds saved for a rainy day.
It may help to start by saving one month’s salary and build it up over time. When you buy a home, there are a lot of additional costs that you may not have considered, so having a secure cushion to absorb some of the costs can be invaluable.
Pay Down Your Debts
While it may seem counterintuitive to spend money to save money, having a low level of debt can be invaluable in your journey to homeownership. The more debt you have, the more you will be spending on interest and the harder it will be to make monthly mortgage repayments. As a result, banks may be unwilling to loan to you, or the terms you are offered may be less than favourable.
You should pay your debts down as low as possible to put you in the best possible financial position. It can also help to avoid taking out loans or credit cards unless you really need to. If you struggle with debt, it may be advisable to put off buying a property until you are on a more secure financial footing.
Consider Your Future
You should carefully consider where you want to be in the future when buying a property. You will likely remain in your property for years or even decades, so it is a good idea to ensure that the property and area offer all you need for the future.
For instance, if you hope to start a family in the near future, it is a good idea to buy a property that is close to the best schools. These considerations may be tricky, as it can be hard to know what the future holds, but you should consider various options.
Invest In Stocks
Investing your money can help you grow your savings and give you financial stability in the future. It can be difficult to know how best to invest when you are new to the market. You should do plenty of research and decide what kind of businesses, stocks and assets you want to invest in. It can help use the advice and resources of a professional financial company like Wealthsimple. Take a look at their excellent article explaining how to buy stocks to help you get started.
Keep Track Of All Your Expenses
Budging is crucial if you plan to make a large purchase like a property in the future. You should always know exactly what is going in and what is coming out of your bank account. It may help to use an app or a diary to keep track of various costs.
Noting down where your money goes each month can help you identify how you could cut out unnecessary expenses and save more. For instance, you may find that buying a daily morning coffee from the local coffee shop quickly adds up. Likewise, you could look at the various subscription services you pay for and see if you can give up one or more.
Investing in yourself can be an excellent way to invest in the future. Consider the many different options to build your resume and enable you to find more high paying work. You could consider talking to your employer about training opportunities that will help you progress in your chosen field. The more you invest in your education and skillset, the better the job opportunities that will come your way.
Buy A Fixer-Upper
Buying a property in need of some TLC can be an excellent way to cut costs. It is important to note that buying a fixer-upper can time consuming and costly to fix up. You will need the expertise to carry out renovations yourself or the funds to pay someone to do so on your behalf. That being said, a fixer-upper can still save you money in the long term, and once you have fixed up the place, you could sell it on for a tidy profit.
You should also be aware that you will need to live in the home while you are renovating. It may help to find a property that has the right balance of adequate living areas and areas for improvement so that you can live there while you renovate.
Find An Excellent Real Estate Agent
You will need the help of a reliable and expert real estate agent to find your dream property. You should be clear about what your new home needs and ensure that they will help you find the right place. Always choose a local real estate agent who has knowledge of the area. It may also help to check out a real estate agent’s reviews and testimonials so that you can see how happy customers have been with them in the past.
Keep Credit Utilisation Under 30%
You should work to keep your credit utilisation to under 30%. Credit utilisation is the amount of credit you use. For instance, if you have a credit card with a limit of $1,000, you should ensure you use no more than $300 of it at a time. Keeping your credit utilisation under 30% can show lenders that you are responsible with money management and can boost your credit score.
Work Out How Much Mortgage You Can Afford
When choosing a home, it is important not to reach beyond your means. You should consider how much you can afford to pay each month and modify your property expectations to be realistic and achievable. It can help to contact lenders to find out about mortgages in principle and get an idea of how much you could loan. It is also best not to take out the maximum amount offered. Often, choosing a more modest property can be beneficial for a first home.
Buying a property before the age of 30 can be challenging, but you can do it with hard work and determination. You should consider any way to reduce your monthly outgoings and direct as much of your savings as possible to your down payment. You should also keep an emergency fund separate from other funds.
There are many ways to boost your chances of getting a mortgage with favourable terms, and it is crucial that you constantly work on your financial health. It can also be very beneficial to find smart ways to invest your money to help you build up your savings and down payment.