Getting on the property ladder is harder than ever before. Young couples are delaying marriage and having kids as a way of saving up for a property. Others aren’t bothering at all, resigning to a life of paying rent. Whilst affording a down payment still requires some savings, you don’t have to be rich to afford a property. There are lots of creative ways to pay less for property. Here are a few methods that could be worth considering for any potential first-time buyers.
Consider the location
Not being fussy about location is the easiest way to nab yourself a cheap property. Rural properties can often be cheaper than urban properties. They can be good if you’re looking for a home, but not so good if you’re looking for an investment that in the future could allow you buy a bigger and better property. Buying a property in an upcoming urban area is thought to be the best method of property investment – just be aware that you may have to rough it out in undesirable area. It’s always worth looking into crime stats first. Your safety is more important than getting a good deal.
Look for foreclosures
When a property owner falls behind on their mortgage payments, it’s sometimes possible the property may be repossessed. These types of properties are known as foreclosures. Such properties are generally cheaper as they don’t have the appreciation value that are other properties come with. You can find some sites online that sell these kind of properties. Many foreclosures will be in good condition whilst others may need some work. Either way, they’re likely to worthwhile.
Consider ‘as is’ properties
‘As is’ properties may not be in good condition and may require you to pay for some extra work to be done before moving in. However, they are generally much cheaper to buy as a result. When searching these properties, it can often be worth hiring a surveyor to get an idea of the likely repair costs needed to restore the property. Even with these repair costs added on top, ‘as is’ properties can generally be a bargain – most people don’t want to take them on simply because of the extra work required on top.
Build your own home
Few people realise how cheap a self-build is. You may be able to construct the property for a quarter of its sale value in some cases (cost of labour included). You will have to buy land first, which can be the expensive part, but altogether it’s likely to still work out cheaper than buying a regular property in many cases. As with standard real estate, there are self-build mortgages so that you don’t have to pay for the entire cost upfront. Building a house can be time-consuming and it’s worth over-budgeting as extra costs are likely to crop up along the way. There may be some restrictions when it comes to the land. Make sure that before buying any land, you’ve thoroughly researched into what you can and can’t build there.
Try alternative properties
Many people stick to standard properties built out of brick and mortar, but by considering alternative property options, you could lower the costs. An example is container homes, built out of shipping containers. This style of home may not be for everyone, but is remarkably cheaper. You can still kit these homes out with all the luxuries of a standard home (there are companies that can do this for you). As with a self-build, your biggest cost will be buying the land to put your container home on.
Another alternative option is to live in a houseboat. These can be purchased very cheaply compared to other properties. You will still have to pay mooring costs, but this is nothing compared to your average rent or monthly mortgage payments. Be wary that you may have to pay to get some houseboats transported to the appropriate location.
Shop around for mortgages
On top of shopping around for properties, you should take great care shopping around for a mortgage. There are lots of different lenders out there all charging different interest rates and asking for different minimum down payments. It’s worth using a home loan calculator online to first work out the average mortgage available to you. From there you can shop around for different rates. Use mortgage advisors and online comparison sites to do your search.
Better mortgage deals may be available to those with a better credit rating. If you have a low credit score, it could be worth taking out a credit-building loan first from your bank to help repair your score. You could also employ a mortgage broker to try and find you the best deal. Mortgage brokers have access to deals that you may not find on shopping yourself on the market, as well as being able to cater for people with low credit ratings. However you will have pay for their services.
Use help-to-buy schemes
There are several help-to-buy schemes out there that can help you to build up savings to then pay a down payment. These include savings accounts and help-to-buy loans. Many of these schemes still require some saving up, but they can ease the load. Always read the small print when taking out these loans as some savings schemes cannot be used by first-time buyers or may only be used as a contribution to a down payment.
Invest some money
There are many ways to invest your money that could similarly allow you to save up enough money for a down payment. You could find a regular savings account to put your money in that may gain enough interest to eventually afford a property. There are other more risky strategies out there that may allow you to save up more such as investing in shares or investing in another asset such as gold. You’re best always getting advice from an investment guru when it comes to these methods as you don’t want to gamble away any savings you may have.
Learn to negotiate
It’s possible to negotiate the cost of a property in many cases. Many agents may overvalue a property slightly to allow room for negotiation. Direct sellers may be harder to negotiate with but it’s likely they’ll be charging a cheaper price anyway given that agents look to make a profit for themselves. Try to negotiate down the price if you can but don’t go in too low. In some cases where there’s competition over a property, you may want to think twice before negotiating too hard.
Budget for moving extras
On top of the deposit on your property, it’s worth making sure you have enough money for moving extras such as hiring a surveyor, hiring a conveyancer and potentially a removals company to transport your possessions. In many cases, you can bring down these costs through further negotiating and shopping around for quotes. In some cases, you may not need to hire a removals company – if you’re only moving a short distance and don’t have too many possessions it could work out cheaper to hire a van for a couple days.