If you are thinking of buying your first home, you have an array of purchasing options to consider before plunging into the market.
They can be quite bewildering if you don’t take the time to do your research and seek advice.
As your local real estate agent, we believe in the keep-it-simple principal.
So, let’s break this down. You have four key considerations that will affect your buying decision:
- Your financial situation – how much money do you have to spend.
- Lifestyle – how much of your lifestyle are you prepared to give up to make mortgage payments.
- Type of property – are you seeking an apartment, townhouse or detached residence.
- Location – where do you want to live and is it within your budget.
It’s a sad fact of life that many young buyers can’t always afford what they want. This is why the concept of rentvesting is becoming popular. It means you should buy what you can afford, and rent where you want to live.
This breaks the traditional approach of buying a property and living in it.
If you have a good job but insufficient equity and cash-flow to buy property in areas such as a CBD or inner-city, rentvesting is a great play.
The key benefit is receiving rent from tenants living in your newly purchased property, which helps you meet the mortgage payments. However, there are capital gains tax implications from being a landlord, so seek advice from a financial adviser.
You should also regard rentvesting as a long-term strategy as capital gains can take a few years to realise.
Even with this approach, some young buyers need additional assistance. Many of them are teaming up with their parents to get their loan guaranteed.
In most cases, parents will mortgage a portion of their own home to help their children meet property prices that would otherwise be beyond their reach.
A guarantee is the only way to obtain a 100 per cent mortgage against a property. Some lenders may offer up to 105 per cent of the value of a property to cover associated expenses, such as stamp duty, legal fees and any renovations. Of course, this extra money must be guaranteed, too. Your mortgage broker will be able to tell you if this option is suitable for you.
But homeownership may not be beyond your reach after all thanks to these innovative options.