What You Need To Consider When Buying Your Own Home
When buying your own home, you may spend hours searching for the lowest possible interest rates – but what will a saving of $5 per week achieve?
The most important thing to consider when buying your PPOR (Principle Place of Residence) is how the property will make you better off financially.
Most First Homes Aren’t Dream Homes.
Most people treat buying their first home as an emotional decision. They worry about the kitchen counter tops, the size of the main bedroom and the state of the bathrooms.
But, if you make any decision based on emotion, without logic, then it is likely to be one that ends in disaster.
More often than not, first home buyers can’t afford their dream home. Instead, they need to buy something in line with their budget that is appropriate for their family and themselves at that moment in time.
They live there for a few years until they are in a position to buy their dream house – or, at least, something a little bigger.
How Can You Buy Your Dream Home?
If you intend to buy your dream home further down the track, your first home purchase can be structured to help you achieve this.
Buying below market value is something most people don’t do – yet it can give you so many options to grow your wealth.
And, yes, it is possible – if you have the right team with the know how to bolster your chances.
Buying Below Market Value Gives You Options.
If you pay less than market value, then you are already in a good position. It means you already own a nice chunk of the property.
You will also pay less interest because the loan size is smaller.
You could possibly sell the property to recoup your deposit while also getting the remainder of the profit after closing costs.
This means you will have grown your deposit to a point where you could possibly buy a better property.
Alternatively, you could take out an 80% lend on your equity and use it to buy, build and sell for a profit. If you did this several times, you could use the capital from each project to pay off your home loan debt in minimal time.
Or, you could use the 80% lend to purchase a few investment properties for $200,000 each. By the time they have doubled in value, you could have several hundred grand in profit. But, if you repeated this procedure a few times, you could have 10 properties bringing home $100 each in rent each week. This would give you a passive income of $50,000 each year.
It is always helpful to have your investor cap on – even when buying your own home.
Because, there’s no point slaving away to pay off an overpriced house if it isn’t your dream home.
And, if you do find yourself struggling to pay it back, how will you ever get to the point where you can buy the house of your dreams?
Have you been able to utilise your PPOR in order to build wealth? Please share your experiences in the comments section below.