It can be tough to make the move from seasoned renter to first time homeowner. Financial struggles can dictate if rather than when we can afford our first little patch of bricks and mortar. As property prices continue to soar and outstrip salary increases, it can be more and more difficult for young people to leap onto the property ladder. However, if you save and work towards building up enough cash for a deposit, you can find yourself purchasing your very first home.
Renting is an easier way of life because you have no ties or responsibilities. If you want to move out and move location, all you need to give is one month’s notice. This is great for someone who doesn’t like to be tied down. However, for those people who yearn for a bit more financial security, and who don’t want to line the pockets of landlords anymore, securing an asset to call their own is the next step. Take a look at how you can morph successfully from renter to homeowner.
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Firstly, you need to work out how much you can afford to spend. With the financial climate a la Brexit being more volatile than usual, it would be wise not to overstretch yourself. There are plenty of mortgage calculators online that will tell you how much you can afford to borrow based on your salary, other income and outgoings. Take this figure and keep your budget below. Banks won’t look kindly on someone who wants to max out their home loan options.
When applying for a mortgage, you need to appear like the perfect responsible borrower. If you need a new car, save it until after you’ve bought your house, otherwise you may look frivolous and unmotivated in your quest to buy a house. Stay in the black and don’t venture into your overdraft for at least six months prior to applying for your home loan. Get online and check your credit score. If it’s low, check out the free advice you can utilise to bump it up. By registering on the electoral roll you will be boosting your credit rating.
Where Will You Buy?
Most people will want to buy in an established area. Those ‘up and coming’ monikers may sound good but the chances are that these locations have been labelled this way for years, by estate agents who are eager to put a positive spin on things. Instead, do your research and take a look at the property markets. If a location that you like the look of has seen house price rises for the past five years, you are probably onto a safe bet. Think about what you love and how your home will fit your lifestyle. Do you want to be in the think of things surrounded by noise and cafes and culture? Or would you prefer a little more isolation in the countryside?
When you have decided on a location, you need to get hunting for your specific pad. Many people want a home that they can grow into. This usually means space. Space is a luxury, so the chances are that there will be something that you need to compromise on. This could be the size of the garden, the fact that there’s no garage or the fact that the house is east facing. Remember, this is your first purchase, not your forever home, so think sensibly with your head rather than your heart.
You may want to look into doing some DIY. By purchasing the worst house on the best street, you’ll have the location all sorted, and you can create the dream home from a blank canvas. Doing a renovation means that you will outperform the market, meaning that when you move to your next property in five years time, you’ll have more equity with which to do it.
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While a tad wacky, some people choose to stay renting, while investing their deposit overseas. There is a method in the madness, as many overseas property markets are booming. Instead of buying a home in where you live, you could use a company like PropertyGuru to help you find a home overseas. You can then let this out, making more money each month than the mortgage you need to pay back, and you have a readymade holiday home come your annual vacation. Purchasing overseas does require more thought as there are language barriers and different property laws to adhere to. However, this is worth consideration if you aren’t precious about buying where you are immediately.
It’s not easy becoming a homeowner in the twenty first century. However, with some planning and forethought, you can make your move onto the first rung of the property ladder.