When we purchased our first home, our ‘why’ determined that we could only afford a studio or one-bedroom apartment in our favourite area. Actually, even a one-bedroom was out of reach.
With a young family, this wasn’t realistic for us.
To buy a property that we could repay in five years we realised we needed to buy a house outside of our ideal area. We had to move out of the area to buy within our means because we could not afford a big enough property in our favourite location.
Once you work out how much you can afford to pay for a property that you can pay within a short amount of time, you have to get real about where those places you can afford are. If you are buying a property for the sake of paying it off in five to ten years then you are unlikely to be buying your forever home. Get comfortable with looking at places outside of your ideal location.
Ours was over an hours drive from our favourite location, but we knew we wouldn’t be there forever, and that time would go quickly; so we made the move and purchased within our means.
For our second property, our ‘why’ changed. This time it was to buy a property (that wasn’t an apartment) in our favourite location. At the time the interest was cheaper than paying rent so it didn’t make sense for us to rent and we were happy to take out a loan for longer than 5 years.
We bought the cheapest non-apartment at the time, but it was very small. We joked at the time that it was the cheapest house on the market… and also the smallest!
It really was!
We did it because we wanted to buy in our favourite location. It was all we could afford that wasn’t an apartment!
Go back to your ‘why’ for buying as this will determine what you look for and what you buy. If you fail to follow your why, you will aimlessly go to every open home, week-in, week-out not really knowing what you’re looking for, or buying a property that will not benefit your situation.
And just because this book is about paying your home loan off in 5 years, if that doesn’t work for your situation you don’t have to do that either. It’s ok to pay it off in 7 or 10 years, or anything less than 30 years really; it’s up to you. It’s your choice.
Maybe at the time you are buying it is cheaper to buy than to rent. It’s ok to take longer than 5 years to pay your home loan off. You can still make great savings on a home loan greater than 5 years.
Look at your situation and what will work best in that situation. Every situation is different.
Want to know what else you can do to be ready to buy? Coming right up in the next blog post.