The biggest hurdle for millennials looking to buy their own property at an early age is the down payment. Unlike mortgages, down payments should be paid usually within a year of purchasing the property. Its value might be daunting to many, but you can save up for down payments by setting aside small initial amounts.
"Just get started. Start setting something aside as savings every month, no matter how big or small. You can always build on it," said Karen Carr, a financial planner at Boston-based Society for Grownups.
One way to do this is to subtract your current rent from your estimated mortgage payment, and then save the difference. Your estimated mortgage payment should include the principal, interest, property tax, mortgage insurance, and homeowner insurance. Aside from building your savings, it also helps you get used to your anticipated budget as a homeowner.
If you're struggling to look for sources of savings, start in your own home. According to wealth advisor Ronit Rogoszinski, if you are paying more than 30 per cent of your income for rent, consider moving to a cheaper apartment. You also need to scrutinize every expense, such as your gym membership, food, and shopping habits. You might even want to talk to your employer about moving your work location to an area with low-cost housing.
Market timing is important, but the longer you wait, the stronger you will feel that you will not be able to purchase anything. After all, official cash rates are at a record low these days, so there is a risk of higher prices and rates in the future. It is better to start saving up now to help you purchase sooner rather than later.
Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker