There are many benefits to buying your own home, to the point that it is foolish not to invest in a property if you are able to afford it. However at the same time there is also one very compelling reason not to get your own home – which is of course the small matter of not being able to afford one. A property is one of the most expensive purchases you are ever likely to attempt to make, and it’s nigh impossible for most people to afford their own property without at least getting a loan. But then what do you do if you can’t afford the loans you are offered either?
Well of course the easy answer is that you try and make the loans more affordable. Here we will look at how you can potentially do that.
First of all, it’s highly important to be realistic in your expectations and in the kind of property you are going to go for. Remember that you won’t necessarily be able to afford every property you could possibly want, and that you need to start small and work your way up. So look for a home that’s in your price range, wait until you have amassed a decent amount of money to put down as your deposit and then start looking into getting your profit. At the same time if you can’t afford the property then look into teaming up with other people who maybe are also looking for a cheap way to get a home. The simplest way to get a cheaper property loan of course is quite simply to look into getting a cheaper property…
You should also look to shop around as much as possible for your loan. Different loans companies offer different benefits and different deals, and they are better for different people. What might be a good loans company for one person is not necessarily the best loans company for someone else. Speak to the loans companies, negotiate and shop around to see where you can get the lowest APR.
The better your credit rating is, the more easily you will be able to get a cheap loan. Loans companies see your credit rating as an indicator of how reliable you are with money. As such if you credit rating is very good, then they will instantly presume this means you are trustworthy and likely to pay them back in full. There are many ways to increase your credit rating, and generally these all revolve around demonstrating your ability to manage money. Try proving this ability by opening up a credit card and then making sure to pay off all of your repayments regularly at the end of each month. Likewise you should try to avoid any cheques bouncing or going into your overdraft and you should generally ensure that your finances run as smoothly as possible for as long as possible.
Pay a Bigger Deposit
The more you pay yourself of course, the smaller the loan you will be taking out and the sooner you will be able to pay it back. If you can get help from family or friends in order to pay a bigger deposit to begin with then this might be worth bearing in mind.
Pay it Back Faster
You will agree your repayment scheme with the lender which will decide how often you pay back your money and how much you pay each time. The more quickly you can pay this off, the less interest will gather over time, so this is of course an important way to save money. You might be forced to live frugally for a while, but at least you can ultimately save more in the long run. A worthwhile investment.
A secured loan is a loan that is taken out against some form of collateral – normally this being a property. Of course you don’t have a property at this point which is the whole reason you are asking for the loan – but could you potentially use your parent’s home as collateral? If they trust you enough then this is a great way to reassure the lenders and to bring the cost of that loan down a lot.
Author of this post Michael King is a home buying and selling expert and works with Optima Estate. Michael has written a lot of articles and posts helping home buyers.