For many young people, there’s a commonly held misconception that you have to choose between owning a home or being able to do pretty much anything else. Something that many people love to do (and with good reason) is travel. Travelling is super rewarding and really fun, but it also happens to be expensive.
For many people, the short-term gains of travelling are far more attainable than the thought of being tied down with a house and a mortgage. But we think you can do both.
Here’s a guide to show you how you can buy a home and still travel the world. After all, with good budgeting and planning it’s possible to have a great life without missing out.
Save like mad – and stick to a budget
Yes, this is one of the biggest things you can do, even though it is neither glamorous nor easy. You see, while it’s simple enough to make a budget, it’s another thing entirely to actually stick to it. Many budgets are exceptional works of fiction where the basic premise is great, but where the reality doesn’t match the outlined saving plan.
We know you have probably heard this before, but the only way you can make your travelling and home ownership dreams come true is to make a plan and stick to it.
- Track your expenses using an app that allows you to see your spending
- Find out what you spend the most money on in a month and then see where you can cut back
- Figure out how much your subscriptions are costing you; could you split Netflix with a friend? Could you use Spotify free instead of premium? All of the little things do add up
- Identify what you are not prepared to miss out on and then work out where you can make sacrifices
Make a list of goals that will keep you going – things like motivational statements “would you rather have a latte today or a coffee in your own kitchen in three years’ time?”
Leverage credit cards with great rewards
There are so many credit cards out there offering a range of rewards and offers. If you’re going to be paying your bills anyway, you may as well be using a credit card to help you out. Many credit cards offer great cash back deals on flight purchases and you also reap the benefit of your credit card making a difference to your credit score – provided that you pay it back on time!
- Research the different types of credit cards out there and pick one that offers you the best possible rewards for your style of spending
- Be loyal to an airline when you are looking to fly; you may begin to level up in terms of your status which means that you’ll be eligible for benefits in the future
Research homes and consider rentvesting
Have you heard of rentvesting? Many young people (and older people) are turning to rentvesting as a means to buy a home but still live in the area that they want to live in. How it works is that if you want to live in Paddington but can’t afford to buy there, you buy a home in Sunnybank Hills and then rent in Paddington.
You don’t have to sacrifice your lifestyle – rent where you want to live and purchase a home in a high-growth area.
- Rentvesting is a great way to get to where you want to be sooner thanks to capital growth
- Consider high-growth areas that are popular with families and young couples
Consider a loan at a higher Loan-To-Value Ratio (LVR) and don’t be afraid of paying lenders mortgage insurance (LMI)
Lenders mortgage insurance is a premium which is paid by borrowers who are borrowing over the standard 20% LVR. In many cases a bank will allow you to borrow more than 80% but you will need to pay LMI to protect the bank against their risk.
This is usually an amount of around $15,000, but if you consider that a favourable purchase of property may see an increase of $20,000 in a year, that amount would quickly be extinguished.
- Don’t be hindered by the idea of not having 20% deposit; speak to a lender or a loan broker who can help you figure out your options
- Don’t be afraid of LMI as a home can be a great investment – and it may be beneficial to get in the market sooner and start seeing your asset appreciating rather than waiting to save 20% of the deposit
Speak to Buddii today about possible mortgages and home loans to suit your circumstances. At Buddii we have a great deal of experience in working with people from all backgrounds and helping them to achieve their home ownership goals.