Due to the pricing of property and the steady interest rates today, a first time home buyer has a lot more options than in the past. Because of this we can now see a lot more people being interested in their dream house rather than just buying a starter home. At the end of the day it all depends on the affordability level of the house and the individual needs of a first time home buyer.
It is obvious that everyone would love to buy their house of their dreams, but due to the financial climate of today most people are not in the position to do so. They will have to settle with a starter home, which is in most cases a lot smaller than the desired home. There are thus a few advantages in buying a smaller house and then to climb the property ladder from the bottom. By buying a smaller house can help them build equity on that house, which will be to the buyer’s advantage for buying a bigger house in the future.
Another aspect to keep in mind is that by buying property is a long term transaction. One should see if you would need an extra bedroom, big garden, swimming pool, shower etc. All these above mentioned “extras” could contribute greatly to the price of the home. The less you pay on your mortgage and the less the maintenance of a house is, the more money you can save for your next dream house.
Of course buying a property privately through the No Agent platform will in most instances save the purchaser money due to no estate agent commission, or the lower commission if purchased via a No Agent Estate Agent partner. Although the commission is paid by the seller, the buyer ultimately benefits from the lower purchase price.
We have seen that most first time buyers are young couples and young professionals who are in the early stages of their career. So by investing in cheaper property will allow them to build on their income in order to be able to afford bigger bonds and to be able to invest in a bigger house in the future.
Another benefit of buying a starter home is that while you live there you can determent which features you will need in your next home and what features you don’t need or want in your next home. This will help that you don’t spend unnecessary money on your home in the future. It will also educate you on some of the new responsibilities that come with living in your own house.
Next I will give some advice for first time home buyers.
One should save long before the time for a deposit on a home, because the more you put down on a deposit the less you will pay on you monthly mortgages and it will help to get your application approved quicker. One should also save at least 5% of the total property price to use on renovations and maintenance. It is always a good thing to pay a bit extra on your mortgage. By paying an extra R300 per month can reduce your mortgage term by almost four years. Last but not least, be prepared for the unexpected. One should be financially prepared to be able to adapt payments if the interest rates change drastically.
It is clear to us that now is a very good time to invest in property. By following these tips and information one will be climbing the ladder of property quicker than imagined.