Blog | 22nd November 2018

A Budget-Friendly Approach to Buying a Home

Knowing what you can afford is key so whether you’re saving for a down payment, looking at bond application options or need more information on the best way to be budget friendly – a full scope of your personal financial picture is the strongest starting point.

Often the difficulty behind knowing when the right time to buy a house hits when we’re unsure of the different options that will suit us financially. Knowing what you can afford is key so whether you’re saving for a down payment, looking at bond application options or need more information on the best way to be budget friendly a full scope of your personal financial picture is the strongest starting point. Navigating the complex world of home buying is tough enough, ensuring you can get the most bang for your buck can often be shied away and take a back seat.
Let’s start by breaking down some misconceptions:

Renting is cheaper than buying
• In the long run, renting offers no wealth creation or return on investment because the property does not belong to the tenant
• Due to annual inflation, the tenant is unable to control rental cost fluctuations
• The tenant is bound to a lease agreement which hinders the freedom to us or renovate the rented property
• For tenants are looking for a stable property there is no guarantee on the lease

Buying a house
• If your credit score has taken a head-first dive it doesn’t necessarily mean you can’t purchase a home
• Finding a house first and then a home – False, figure out what type of loan you would like or best suits you financially. It will save you time and a headache down the road.
• A 20% down payment is needed upfront. Whilst this is the standard – low and no-down-payment loans do exist however paying a larger interest rate might be the consequence. Reeflords offers 0% down payment
• Buying a house worth the entire amount of the bond – if you borrow less and put down a higher down payment, you can lower the interest rate and monthly payments.

Opting for a budget-friendly solution:

Access Bonds
An access bond is a type of home loan that allows buyers who put extra money into their bond, the option to withdraw the extra cash if they needed it. It gives buyers the ability to pay any additional funds into the home account with the peace-of-mind that if the funds were needed at any time it is withdrawable. Benefiting buyers by paying interest on a smaller capital amount while additional money is in the bond. This is an inexpensive option as it is a secured loan with minimal interest rates.

Rent-to-buy
Rent to own properties are more viable options to home ownership. It’s a more realistic and budget-friendly approach to bringing home ownership dreams to reality. Commonly, rent money goes straight into the landlord’s pocket to pay the bond on the property. With a rent-to-buy option, a portion of the money goes towards owning the property, making it an easier inexpensive way to invest in home.
• This option allows buyers who are unable to save for a deposit or unable to qualify for a bond in a traditional way the opportunity to invest in property
• The costs are spread over a much longer period, making the purchase more realistic for a financially stable person with limited access to immediate available capital
• An additional amount is added to the monthly rental to act as a down payment toward the future purchase.

As we’re all aware, the road to home ownership isn’t exactly easy to navigate. With the right option and discipline, the good news is that buying a house doesn’t have to be something you only wish you could do.


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