If you’re young and working, you don’t have to wait until you’re in a permanent relationship before you buy your first home.
That’s the advice of Shaun Rademeyer, CEO of BetterLife Home Loans, SA’s biggest mortgage originator, who says young people often argue that they are not sure they will stay long in the same area or the same job, and that the flat or house they buy may not suit a future partner.
“But we believe Millennials should be aiming to buy a property of their own as soon as possible. After all, you don’t wait to find the perfect partner before you buy a new car or furniture, or before you decide to take an overseas holiday. And the sooner you stop spending your hard-earned money on rent – which generates no return for you and buys you no asset – the better.”
Rademeyer says the other positive reasons that drive young couples to buy a home should also drive young singles. These include:
1. The chance to build up equity and gain economic empowerment. As the value of your home rises and your home loan balance declines, you’ll be building wealth, giving you something to borrow against should you ever need money to start a business, for example, or to pay for further education, or to fund a better retirement.
2. Owning an asset to sell or to rent, should you want to. This means that even if a change in your circumstances does prompt a move, you will have a way of raising the deposit on a new home close to your new job or more suited to a new family. Alternatively, the property can be rented out, giving you some income and security while you travel or take a work assignment abroad.”
3. Gaining independence. Having your own home means not having to share your space – or at least being able to call the shots if your roommates / tenants are too noisy or messy.
As for what type of property to buy, he says many young buyers find the transition to home ownership easier if they buy an apartment or a townhouse. “Such units usually require less upkeep than freehold homes, and come with built-in neighbours as well as extra facilities in many cases, such as a pool, gym, entertainment area and even a laundry or a tennis court. Of course they are also usually much less expensive than freehold homes.”
This is important, Rademeyer says, because young people should only buy properties that they can comfortably afford. “And the calculation of how much they can afford to repay on a home loan must be done very carefully, and must take into account any other financial commitments they have as well as the ongoing costs of home ownership, to ensure that they will not be over-extended financially.