When you are buying your first home is unlikely to be your forever home… it’s not the dream home that you plan to live in for the rest of your life.
It’s important that you remember that when looking at houses.
Sure, there are many things that you may love to have in your home but they may need to wait until the next home or the one after that.
Getting Onto The Property Ladder
Saving that first deposit can be the hardest part – after that, you’re building equity and in most case you will see some capital gains which helps when it comes to the next step up the property ladder.
The key is to take that first step.
Don’t think about what you want as your dream home, but instead think about getting a home that will be okay for now, but will be easy to sell again when you are ready to move tom your next home.
Maybe An Apartment
In many countries a persons first home will be an apartment because they are cheaper than a house.
The main reason for this is because you are paying for less land. If you look at the price that you pay for a property you are paying for both the land and the building and with some properties (locations) the land can be a large portion of what you pay for.
The Advantages Of A House
A house comes with a larger section of land, and generally it’s the land not the house that increases in value.
The capital gains that you make will increase your equity often more quickly than you could ever save money, and that makes the step up to your next home a little easier.
Flats & Townhouses
Flats and townhouses are somewhere in between the apartments and houses.
Most flats and townhouses have a small amount of land which is more than an apartment has, but less than a house has.
This is a great option which seems more popular than apartments in New Zealand. Maybe it is because we tend to like a piece of grass to call our own and have the BBQ on or to let the dog out onto.
The Key Is To Get Started With Your First Home
People will tell you stories of when they purchased their first home, and often they will tell you how little they paid for it too.
While this may still have seemed like a lot of money for them at the time, when you hear about what they paid you will almost cry and just wish you had purchased back then.
I have written about my first home which I purchased in April 1990 for $125,000. At the time that was a stretch for me to afford, but that house today could be worth about $850,000 which means the value has increased by $725,000 or about $24,000 per year. READ MY STORY
While house prices don’t always increase each year, they have tended to increase over time and the expectation is they will continue to increase in value.
We know there are challenges for first home buyers and one of the main challenges is saving a big enough deposit; however you should speak to a mortgage adviser and see what options you have today even if it means not getting your ideal home straight away.