With prices of Australian homes sky-rocketing, many wannabe home buyers are finding it difficult to break into the market. Sydney home medians hit the $1 million mark recently. Therefore, numerous home buyers feel its near on impossible to save the needed deposit to buy a house. But, with a little forethought, home-ownership can be a reality. Lets look at some tips to get you started.
Tip 1. Buy in Affordable Areas
Rather than searching for the property you want, consider buying one in an affordable area. This strategy will enable you to get your foot on the property ladder. Then over time, your investment will appreciate. Later, you can either sell this property to fund your next purchase or keep it as an investment.
Tip 2. Do Your Homework
Research the market before buying and seek out affordable property in growth areas. In addition, look at council documents and planning to find proposed infrastructure and sites for other developments. Next, look at sales data over the last 6-months for these areas to find out what is affordable.
Tip 3. Save as Much as You Can
When you are young you tend to spend money on material items such as new shoes and clothes. You also tend to eat out, buy our lunches and go out with friends to pubs and clubs. But if you stay home, rather than going to night clubs or buying clothing, then you can save more. However, the key here is to save but leave yourself with extra funds so you can enjoy life occasionally. Otherwise, you will find it difficult to maintain your savings plan.
Tip 4. Invest When You Are Young
Many thirty-somethings are able to buy in more affluent areas because they have invested when theyre younger. Take 30-year-old Vanessa and her husband Paul for instance. Both Vanessa and Paul saved $20,000 each for a deposit for a unit. Vanessa bought a small unit in Castle Hill for $190,000 when she was 20-years-old. Paul, on the other hand, bought a unit in Baulkham Hills for $160,000 when he was 21-years-old.
After buying their units, the couple then lived at home and rented out their properties. Anything they earned went into savings, and the rent generated by their units covered their mortgages. Overtime, the rent the units collected were more than the mortgages, so they both began saving even more. By the time Vanessa and Paul married, they had saved enough money to buy themselves a unit in Manly.
The couples Castle Hill property is now worth around $790,000 and the Baulkham Hills unit $667,000. Collectively, the weekly rents bring in $1200.00 a week for the couple, which covers the mortgage on their home.
Tip 5. Ask for Professional Advice
If you are not sure how to invest the money you are earning, then contact a financial advisor. Financial advisors can help you set up a savings plan based on your lifestyle and income. So, you will know exactly how much you need for a deposit, and how you are going to save this money. They can also estimate a time frame for you to save.
Furthermore, a buyers agent can be an asset when youre seeking to buy an investment property. Buyers agents have a wealth of real estate knowledge and they will negotiate a sales price on your behalf. Therefore, they can shave thousands from the purchase price of a property.
A buyers agent typically charges you a percentage of the property price when you buy a home. For instance, lets say you buy a property worth $500,000 and the buyers agent charges 2 percent for their service. This means that the buyers agent will cost you $10,000. Now while this may sound hefty, if you are buying an investment then this fee is tax deductible.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!