How to buy your first house at your young age in 2022 – Wordva

When you’re in your twenties, owning a home may seem like a fantasy. With student loan debt and an entry-level salary, you may be struggling to make ends meet.

Millions of millennials have purchased a home, despite the fact that the process might be intimidating. There are now more millennials owning homes than any other age group in our country—and a lot of them are doing so without even considering marriage or children.

A new generation of homebuyers is about to replace the current crop of millennials. It’s expected that the housing market would be flooded by Generation Z—young adults who were born after 1997.
83 percent of 18- to 25-year-olds plan to buy a home over the next decade, according to statistics gathered by financial services company Morningstar in April 2020.

Members of Generation Z also anticipate they’ll purchase their first home by the age of 30—three years earlier than the current average homebuying age of 33.

For many young people, purchasing their first home means making a lot of decisions about what they want to do with their money and what they don’t want to do. Despite the fact that you’ll benefit from the same advice as other first-time homebuyers, there are a few points you should keep in mind.

Your deposit 
When it comes to purchasing a home, the larger your down payment, the better. Depending on how much money you put down, you may or may not be required to pay lender’s mortgage insurance. Interest rates may also be affected by your LVR, which helps you figure out your repayments.

Your down payment may be smaller if you’re a young individual. A guarantee might be a good idea in this situation. Our Family Guarantee loan allows immediate family members, such as parents, to assist you in purchasing a property without actually paying the money for a deposit. Your guarantor does not provide any money, but equity in their own home can be utilised to lower your LVR to 80%. Mortgage insurance costs can be avoided by doing this. If you have any questions, please call us at 13 14 22 or visit your nearest branch for assistance.

Decide where (and what) you want to buy
In real estate, location is everything, but it is also crucial to consider how long you intend to stay in a particular location.

Consider how quickly and readily you could sale the house if you had to move due to a career change or marriage in your early twenties.

Make plans for the future even if you don’t plan on moving in the near future. As an example, would you prefer to be close to shopping and dining establishments in your neighbourhood? Does it sound like a place you’d like to live in that is easily accessible by foot or bicycle? Do you prefer living in the suburbs or the city itself? It’s possible that you’ll wish to move in the future if a new house comes on the market that better suits your needs.

Your down payment and closing fees should be minimised.
A 20 percent “law” is no longer valid, but you still have to fork up a lot of money in the beginning when you buy a house.
With the down payment you’ll need, you’ll also have to pay closing costs, which can range from 2 percent to 5 percent, depending on the lender you work with.
Fortunately, there are ways to reduce or at least make these upfront fees more manageable.

Abide by your financial plan
What is the primary source of your income? How much do you spend each month on rent, food, shopping, and entertainment? Start delving into it now. Make a budget after categorising your expenses and figuring out where you’re spending your money. You don’t have to do everything by hand in this digital age. There are a plethora of apps that can assist you in creating a budget. In order to keep track of where your money goes, you can compare your income and expenses.

Not only save, but invest as well
Investing your extra money in a savings account isn’t always the best option. Consider putting it to good use. Let’s have a look at a few alternatives to get a clearer picture.

The maximum interest rate for a savings account is 4% p.a. Before taxes, you’ll get a 6% annual interest rate on your fixed deposit (FD) account. Starting at 7% to 8% p.a. before taxes, a recurring deposit (RD) account will earn you interest. Mutual fund investments, on the other hand, can yield returns of up to 15%, depending on the fund.
FDs and RDs are risk-free investments, which means they are not influenced by market movements. Yes, mutual funds are risky, but they have the ability to outperform inflation over time. Because you’re saving now for a property in the future, this can be a huge advantage. Inflation will raise the price of the identical house in the future. Because of this, higher risks lead to a greater payout. Because you have less financial obligations while you’re younger, you can take more risk.

A good credit score
Your credit history can affect whether or not you can get a loan for a house. When a borrower applies for a loan, the lender will almost always do a credit check on them. As a first-time homebuyer, you may have a smaller credit history than other buyers.

In most cases, a lack of credit history does not mean a home loan will be denied because of it. However, the information in your file might make or break your chances of getting a loan. If you’ve ever applied for credit, the results of any applications, and any default information that has been reported by a third party will be included in this report.

Inquiring for help
It’s a good idea to get some advise before you buy your first house. When it comes to obtaining counsel, there are a variety of possibilities. If you’d like to speak with one of our lending specialists, you can do so by calling 13 14 22 or visiting a branch, as well as using online tools like a home loan calculator.

Save for the Future EMIs.
Today, buying a home without a mortgage appears to be a non-starter. And mortgages aren’t cheap either. Every month, you’ll have to pay EMIs, which are likely to be much higher than the rent you’re presently paying. When it comes to setting aside money for your house loan repayment, an online EMI calculator can help. Once you have a specific amount in mind, it may be a smart idea to start putting that money away even before you begin making your loan payments. Practicing how you’ll handle your funds before the EMIs begin will be a good idea.

Assure Yourself of Other Costs
Besides the down payment, there are additional out-of-pocket expenses that must be paid. As an example, stamp duty (5% to 7% of the property’s value), registration costs (at least 1%), memorandum of title deed charges (0.1 percent of the loan amount), and so on and so forth are just a few examples. Brokerage fees, legal fees, home insurance costs, and so on are all included in the total cost. It may be tough to predict all non-loan charges, but you should at least have a rough idea of what you’ll owe (your EMI savings, discussed in the last point, will be of great help).

Loans for Homeownership
Research the type of home you want to buy, as well as third-party websites, to narrow down your selections. If you choose for a floating rate loan, your interest rate will be tied to the bank’s MCLR (Marginal Cost of Funds Based Lending Rate). From 9% + p.a., fixed interest rates are available.

Other fees, such as processing fees (0.25% to 1% of the loan amount), pre-closure charges (up to 5% on fixed-rate loans), and late payment fees, should also be taken into consideration. Comparing all the features of a house loan gives you an idea of how much it will cost you in the long run.

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