Why you’re never too young for homeownership
A friend and his wife, who married young by today’s standards, bought a property as soon as they left home — and haven’t paid a day’s rent in their lives.
Lucky, perhaps. Ahead of their time, definitely. Now enjoying their fourth home before either turned 30, they are the best possible example of why you can never be too young to buy property.
After all, the earlier you buy, the earlier your home will be paid off and you can move on to bigger and better things.
It’s true that homeownership isn’t for everyone, but the advantages far outweigh the initial lifestyle disadvantages.
Unlike other investments, your principal place of residence is exempt from capital gains tax should you sell; you can modify your house or garden at any time (subject to council requirements); your repayments are for your benefit, and the equity in your home can provide a springboard with which to leverage borrowing for investment properties.
As with all prudent investment decisions, preparation is the key to successful home buying.
Helping hand-builds confidence
Parents can play their part, encouraging their children to establish good saving habits by matching any contributions in a no-withdrawal savings account. Government subsidies for first-home buyers are also well worth securing.
With median house prices soaring in capital cities and regional centres, it is imperative to have a healthy deposit of at least 25 per cent of the purchase price.
They say the first $1 million is always the hardest to make, and the same could be said of a home deposit.
However, rest assured that it’s anything but mission impossible.
Starting small for growth potential
Savings can be accumulated by putting away a small amount each week for the rainy day that is sure to arrive in the future.
Even if it’s only $20 a week from a part-time job when you’re 15 or 16, this forward-thinking approach will net at least $1000 each year. Coupled with compound interest and continual saving, this amount slowly turns into $5,000 and then $10,000 before you know it.
That’s why it’s important to develop good savings habits and try to avoid credit cards or pay them off monthly.
The same applies to car loans, as a solid credit history can smooth the road when applying for a mortgage.
Do your homework
Research is another important part of the process.
It’s a historically proven fact that the majority of people buy within a seven-kilometre radius of their current home, so it pays to know your own area. Family and friends can be tapped for advice and never be afraid to ask questions.
Even better, go to auctions regularly and build up a good knowledge of the market, including attending open for inspections, monitoring property prices and getting to know the agents who influence it.
It’s a good idea to take notes of what you like in a property so that you can gauge exactly what you want and can afford when the time comes to buy.
Plan to succeed
You can even make a financial plan for yourself, outlining your annual budget, while adding to your real estate knowledge, budgeting and credit rating by using the vast resources of the internet and gaining professional financial advice.
Like most things, starting small is probably the most prudent move before moving up to the next level.
Most people will buy at least three or four properties in their lifetime, as the cyclical effects of marriage, births and death force buyers to reassess their priorities.
Ready for every opportunity and obstacle
The most important aspect is to be ready when opportunity knocks, and not to overextend oneself by borrowing too much. That can only lead to trouble if interest rates rise, or your personal circumstances change.