A roof over your head is up there in the list of the most important investments you’ll make in your life, so it is natural you’ll want to invest in something that is going to meet all your current and future needs. However, if you are currently weighing up the prospect of buying a smaller home to get on the property ladder early, and waiting it out for your dream home, the former could be your smarter move.
Many people are surging to get on the property ladder before prices start to rocket, due to the fact that the high demand for housing is only predicted to get worse as time goes on. Though you may want a big family, and to live in luxury until your retirement, buying a first time house or flat could help that dream to become a reality quicker than saving. Here are a few reasons why getting on the property ladder as soon as possible could help you a lot in later life.
The Renting Money Pit
Though you may want to wait for a dream home, it is important to consider your current situation. Are you saving in the luxury of your parent’s home or renting your own place? Typical for many people in their twenties, the latter will be their current situation. Renting, unfortunately, has a big impact on your savings – and typically costs a lot more than a monthly mortgage payment. Therefore, you may actually be able to save even more after committing to a first time mortgage. Of course, renting will give you a better chance at qualifying for a mortgage, as you have evidence of making monthly payments on time – the risk also significantly improves the cheaper the property you go for. If you are currently living at home, you may find qualifying for a mortgage a little harder.
Selling To Upgrade
When the time comes for you to move to a bigger property, or one of the new build homes on the market, having a previous mortgage is only going to help the whole process to be easier and smoother. Not only can you put the money from selling your home towards your new home, but you will already have qualified and successfully paid towards a mortgage before.
Rent Becomes An Income
If you decide to move on, but have the means to rent out your first home, then you have an added extra to your income which could pay towards your monthly mortgage payments. This ups your disposable income considerably and your means to pay your new mortgage off quicker. This also could help towards your retirement fund, and give you an added income on top of your pension payments as you get older – allowing you to retire to a more sustainable and lavish lifestyle.
Though you may think bigger is better, that idea becomes significantly outweighed by earlier is better as you get older. If you wait until you have enough money to pay a deposit on your dream house you may find prices have significantly risen, and you may be a too high of a risk to qualify for a mortgage. Getting on the property ladder early allows you to pay off your mortgage quicker due to smaller payments when compared with the average rent, and could be a handy source of income when you are older. It will also allow you to upgrade easily should you need a bigger house, or to relocate in the future.
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