Ways To Prepare For Buying Your First Home In Your 20s
Friday, March 7, 2014
I was 22 when I bought my first home.
I was fresh out of Uni, and had only been working full time for about 9 months before I found myself at the foot of what was to be the biggest financial decision of my life.
And trust me when I tell you that making this decision wasn’t easy. I lost many sleepless nights wondering what I was doing with my youth: should I instead be partying it up in the European summer sun; should I really be settling down with a house that I owned, and turning myself into a ‘real adult’?
Here are five key things I did in order to commit to my decision to buy my first house.
1. I had to figure out what was important to me
Most 22 year olds I knew at the time were gallivanting around the world on their dream holidays. I, however, decided that coming home to a place I could call my own was more important to me in the long-run than how I could spend my 4-week-a-year holiday allowance.
So, instead of an annual Euro trip, I set the money aside in a separate account and saved it for my house deposit, adamant that I wouldn’t withdraw from it for any other purpose.
Luckily enough, I was still able to afford an overseas trip to Asia, but only because I was rather thrifty. I flew on a budget airline, purchased one of their once-a-year-so-cheap-this-can’t-be-true sale fares and bunked with friends that lived overseas to save on accommodation costs.
In short, I was judicious with my spending. Little bits of thriftiness here and there really can add up, you’d be surprised. And especially when you’re young, and relatively financially unencumbered.
2. I had be realistic about how much I could afford. I worried; ‘would my lifestyle change?’
My everyday lifestyle has always been important to me. I wanted to be sure I could continue doing all the things I loved in my life, but without stressing about being unable to pay off my home loan as a result. I created a future budget to know how much I could really afford to spend not only on home loan repayments, but too on the ongoing costs like body corporate fees, rates, insurance and all my utilities. On top of that, it was important to me that I still had enough play-money to go out with my friends and make the odd impulse shoe purchase (I bought 4 pairs of shoes this weekend #plannedimpulsebuys #ilovesales).
Once I knew how much I could afford, I began my search. I stuck to my budget and purchased a modestly sized unit that had been built back the 70’s. It was big enough for one person – me! - and wasn’t the blowout 6 bedroom mansion on the river that I couldn’t afford. It was an investment, and it was my very own home.
My new house at first didn’t have everything I needed, but this didn’t matter to me. I found cheap and easy interim solutions (like over-the-door hangers to make the best use of my small space and impulse shoe purchases) and I’ve slowly made improvements as I’ve been able to afford them over time.
3. I took to my first house inspection someone whose opinion I trusted
My parents live 4 hours away from me, but when I called to say I was inspecting a potential home, they drove up the very next day to make sure I had the moral support I needed when making one of the biggest decisions of my life.
I’m lucky enough to have a Dad who has worked in the construction and pest industry, so having someone I knew on-site with the knowledge I definitely hadn’t got, gave me great comfort. I needed help knowing that the home I was inspecting had real value, and the agent wasn’t just taking me for a ride.
4. I found thrifty ways to save on all those hidden upfront costs.
There are plenty of hidden costs involved in buying a home, and many on top of that which not many people know about. There are government fees, legal and conveyancing fees, pest and building inspections, and not to mention moving costs and new furniture – it all adds up.
I asked myself this: where can I call in some favours? Did I know anyone in my family, or circle of friends who worked in pest control, finance, interior design, those kinds of industries? Perhaps someone I knew owned a Ute who can help me move?
Ask yourself the same, and then see if you can exchange something less costly in return for their services – cooking, cleaning, beer; all are totally viable currencies. Try inviting the family and friends that helped you move to your first dinner party in your new home to thank them for all their effort. You’ll be able to use the money you’ve saved on these expenses and put them towards your house deposit or home loan repayments instead.
5. I even found thrifty ways to save on my ongoing costs.
Unfortunately, the expenses don’t stop once you’ve purchased your home. You’re now committed to keeping that home running. With the cost of living rising, it’s always a good opportunity to take advantage of smart or packaged setup costs deals when you first move into a new place.
Use comparison websites to find out how to save money on your ongoing costs. Electricity and internet companies commonly have special introductory promotions running or bundled packages which you can take advantage of to save money each month. I’m now planning that Euro trip I sacrificed 2 years ago with the incremental costs I saved since I first moved in.
It’s been almost 2 years since I purchased my first home and I still love that feeling I get each day when I walk through the doors into a place I can call my very own.