Breaking into the property market in your 20s may sound like a dream, but with a little foresight and planning this dream can become a reality. One that will allow you to put your hard earned cash to work, providing that you’re focused on achieving your goal.
Let’s look at how you can buy your first home sooner, rather than later.
Buying a home allows you to build wealth, it gives you a sense of achievement and it enables you to get off the rental round-a-bout. Sure, it’s a big commitment and responsibility. In fact, it’s probably the largest debt you’ll ever have in your lifetime, and it can make it harder for you to relocate. But, home buying allows you to build wealth sooner, it puts your money to good use and you’re able to build a stronger credit history, providing you make home loan repayments on time.
Understanding Home Loans
However, before you rush into buying a home there are a few important facts that you need to know. These include the following:
What’s a home loan? A home loan is a lending agreement made between you and another party. The party lends you a sum of money to buy a home, and in return you pay them back the original amount you borrowed, plus interest, over an agreed term.
How do I apply for a home loan? You will need to fill out an application with a lender. At the time of lodging your application, you’ll need to provide the lender with your identification, and proof of income, as well as assets. A lender will also ask you about the number of dependants you have, and any other financial liability such as outstanding debt.
How does a lender use this information? A lender uses your information to ascertain whether or not you’re a good financial risk. They want to ensure that you can afford to make repayments, that you have enough assets to secure your home loan, and that you can repay your home loan debt on time.
How can I increase my chances of securing a home loan? Having a good credit history, where you have made regular repayments on time, will work in your favour. These payments include, other loans, credit card repayments, store accounts and bills. Lenders also like to see a regular saving history and some will consider rent repayments as proof of your financial reliability. In addition, reduce any debt you have, and save a deposit as a lender will not lend you 100% of a home’s value.
Do you want to know more about buying a home in your 20s? If so, then contact eChoice, we can help you.