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Planning my retirement home


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Planning my retirement home

I know that this house is going to by way too big for us when I retire. I don't want to have to maintain the house and garden now or have all this money locked up in a house. I want to be able to head off for the weekend without needing to organise people to come around and water the plants for instance! I have been looking into our options for downsizing and have learned about some of the ways we could do that and maximise our retirement income. I hope that the information I have found might be useful for other retirees as well.

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How First-Home Buyers Can Enter the Market Despite Its Growing Unaffordability

There has been much said about the growing challenges for first-home buyers in getting their foot on the property ladder. Despite the well-publicised affordability crisis plaguing young home buyers and the dream of owning a home fading, the truth is that there are still some creative ways first-home buyers can get a foothold in the property market. Sure, they may not always be your dream home, but upgrading down the path as you create leverage is what the climbing the property ladder is all about.

Go in as a Group

To overcome affordability struggles, buying as part of a group in a co-ownership agreement can be one of the best ways to avoid being locked out of the property market. The process is fraught with pitfalls though, so be sure to discuss your expectations together.

Ensure there is an alignment of goals about owning the property, discuss how much share each person will have based on their contribution and what the exit strategy will be if one party wants out. That said, with the right approach buying into a property as part of a team, whether friends or siblings, can share all the costs associated with buying a home and open up far more properties to choose from.

Increase Revenue or Decrease Spending

Saving for a house deposit requires tough financial compromises at some point, especially when you want to purchase in areas where there is tough competition. In the face of rising prices, buying a home will mean making tougher financial sacrifices and this may include moving back in with mum and dad to save on rent costs, or going without the usual luxuries and entertainment.

The advice of saving at least 10 per cent of your wage is time honoured to save enough for a deposit. Boosting your savings will usually mean changing spending habits or bringing in more money through working a second job. Proof of regular savings will also help to secure finance when the time comes to apply for home loans.

Buy Property Outside Capital Cities or on City Outskirts

To enter the property market, buyers will have to face the fact that they will likely have to purchase outside some of the more attractive leafy suburbs. Look at properties in regional towns and cities and remember that if you buy a newly constructed home it's likely to be eligible for government grants in most Australian states.

There is also the option to buy off the plan. This method of buying has the benefit of locking in a price now with repayments only commencing after the property is completed—usually a few years down the track. The benefit for first-home buyers is the home appreciates in value during the period and also buy them more time to save.  

Become an Investor

Many young buyers are forgoing the chance to live in their purchased home and instead realising the benefits of becoming an investor. This option will provide a reliable rental income that will largely cover their mortgage while they continue to rent in a suburb that's convenient. First-home investors may take this route to invest in more affordable areas with solid growth prospects (usually outside of capital cities) without having to change their lifestyle.

If first-time investors are currently living cheaply, whether through living with parents or sharing their rent with friends or a partner, this will also increase their capacity to purchase a home as an investment and also pay down the mortgage.

While all these options can represent ways for first-home buyers to get into the property market, its important all buyers do the math to determine whether they have the financial capacity to make these options work. This may mean combining a number of the strategy, buying a smaller home or looking at other creative ways to get into the market.

Despite the challenges, the investment benefit of owning property provides leverage for wealth creation and future financial security.  For many, this alone makes the compromises and sacrifices well worth it.