Tips and Tricks for Beating the First Home Buyer Burnout

by Greg on September 5, 2016

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We all know that buying a house, especially a first house, often creates a huge financial strain. Unless you buy far out from the city, or unless you manage to save large amounts of money, you will be in the majority of people who get a mortgage to buy a house. This means you will likely spend the next decade or more paying off your mortgage, which can have a real strain on your finances for a long time. There are ways to reduce this strain, or burnout, that you can implement before you buy, as you buy, or after you buy, all of which can help you in the long-term goal of feeling the sting of a big ticket item such as a house. Yarrabend is a newer suburb toward Melbourne’s CBD on which these tips and tricks can be used, however they are useful in any property-buying scenario. We have compiled a list of just a few of the things a person can do to reduce the strain of the coming financial storm.

Save More, Borrow Less

The greater the amount you borrow from the bank in a loan, the higher your repayments will be. This is true across all banks in all countries, and it is in place to ensure that they will get their money back from you in a timely manner. Because of this, many people save the minimum amount needed to secure a loan, then borrow and pay the higher repayments for years to come. By saving more than the minimum, you can organize to have lower regular repayments and therefore feel less of a sting when the payment time comes.

Rent to Reduce costs

When buying a house, the tendency is to want to buy and move in as soon as possible. Your new home awaits, and you can’t wait to set it up just how you want it and start your life in it. This, unfortunately, isn’t always the best idea, as you then start paying your repayments and, much like renting, your life becomes a cycle of making sure you can put in the next month’s payment.

Fortunately, there is another way.

If you buy a house and rent it out, the rent earned from your tenants can seriously offset the cost of your repayments. This is known as Negative Gearing, and in theory it means that while you keep renting, your house is mostly paid for by other people. The flip side of this is known as Positive Gearing, in which the rent you charge earns more than your loan repayments cost, leaving you with more money than you would otherwise have, although being able to do this is much more rare.

Buy low in upcoming areas

Buying a house in a nice suburb with an established house cost and familiarity is a sound investment, and a safe way to go with your first house, however if you’re looking to reduce costs, it might be an idea to go to an up-and-coming suburb for your first purchase. Upcoming suburbs are usually lower in cost with higher growth in house prices, so instead of paying $1 million for a house, you might only pay $500,000. In 10 years, the $1 million dollar house might be worth $1.2 million, and your house might be worth $900,000, so you’ve spent less and your house has had more significant growth.

These tips are useful in house purchasing, but always remember to thoroughly investigate the areas you are looking to purchase in, and make sure the information you get on the viability of a neighborhood’s growth rates is reliable, or you may find yourself losing an unacceptable amount of money in the future.



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