One of the biggest financial decision you will have to make in your life is whether or not to buy a home. In recent years, the idea of buying a property has decreased among first-time owners. However, by choosing to rent rather than buy, many people are missing out on some key benefits of owning their own home. As such, here are three main reasons to buy your first property before you reach 30.
Get Ahead of the Game
The main point of buying a "starter" home is to give you some leverage to move up the property ladder quickly. Buying property at an early age gives you a head-start against your peers as you'll be able to make a dent in your first mortgage and apply for larger loans down the line.
Buying a property in your mid-to-late twenties gives you the best opportunity to retire with some tangible assets behind you, giving you a sense of comfort as you plan to leave the workforce. Of course, you may not be thinking about this just yet; however, taking these steps early will ensure you don't look back with regret and a mountain of debt as you near retirement.
Finally, buying a home early means that you and your partner will have a great inheritance to pass on to your children when the time comes. You don't want to be nearing retirement and worrying that your children might struggle, so getting on the property ladder early will give you the sense of security you need.
Boost Your Credit Rating
While taking on credit may seem like a bad thing when you're young, you'll realize the importance of having access to finance when you reach your early-to-mid thirties. It may seem counter-intuitive, but having a strong credit rating is crucial in bringing financial security to your family as it grows. Of course, it's understandable that you would rather pay for things with cash and have no debt; however, having access to credit when you really need it is a great security net to have.
Unfortunately, sourcing credit is becoming more and more difficult. In order to have access to credit cards and loans, you have to have a track record of managing your existing sources of credit. Having a mortgage is the safest and most reliable source of credit you can have. While you may miss a few credit card payments, it's likely that paying your mortgage will be the first thing you do with your monthly salary. Therefore, having a mortgage behind your name regardless of the loan's value will be extremely beneficial should you require credit in the future.
Take Advantage of Inflation and Appreciation
When many people consider buying a home, they are often discouraged by the predicted cost of the property of their lifetime. Committing to a mortgage of $300,000 seems like a huge investment for many young couples. While this is indeed true and no mortgage should be taken lightly, many people forget to account for the impact of inflation when weighing up their options.
The principle of inflation is very easy to understand—$1 today will buy you much more than $1 in 20 years' time will be able to. Of course, wages will inflate also so it's important to factor this in. However, it's safe to say that due to inflation, your house will become cheaper and cheaper to live in as your mortgage rates are fixed.
Similar to inflation, many people underestimate the impact appreciation can have on their property. Between 1968 and 2009, the average existing property price increased by 5.4% annually. While this does account for inflation, it's clear that buying a property early gives you the best chance of making a sizable profit when you decide to sell.
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3 August 2015
Waterfront properties are beautiful most of the year. Waking up each morning to the serene view is one of the most pleasant parts of my day, but there have been several issues that have come up over the years because of the location of my home. This blog is all about waterfront homes. You will learn tips for choosing the one that you buy, maintaining it over the years and signs that you shouldn't purchase the home that you are considering. These and many more tips are found right here to help you get through the selection process and know if you are up to owning a waterfront home.