How can Millennials secure their first home purchase?
If there’s one area of life that causes millennials pain, it’s home-buying. This generation is the first to have really felt the brunt of rising property prices, low wages and the legacy of the baby boomers. Many of their parents’ generation were able to buy their first homes in their twenties, sell their second homes, all at prices which only represented twice the average salary, not 4 to 5 times like today!
To add insult to injury, millennials are often accused of frittering away their hard-earned salary on luxury items – apparently avocado on toast features highly, at least in the minds of some financial journalists!
However, there is light at the end of the tunnel. Smart younger property buyers who are keen to do what it takes to get onto the property ladder can find a way. Often, it means changing your way of thinking and trying some radical new approaches. The way people are buying and the way people are selling property in 2017 is new. Here are some ideas to get you started.
1. Look to property auctions
These aren’t for beginners, but if you can spend time learning about property auctions, understanding how they work and building up your confidence, then you could put yourself in a position to pick up a bargain. You’ll need to have 10% of the cash sale price ready immediately and typically you need to provide the balance within 28 days.
Remember, if you win a property at an auction, it is a legally binding contract. Attend at least one as a spectator to get a feel for what’s happening and read widely about the process and the ways in which you can spot a property bargain before you turn your hand to bidding for houses.
2. Consider different areas
Many first-time buyers become locked on to ‘must have’ areas and overlook other, more affordable areas. Everyone wants to find the next up and coming location, but there are plenty of areas which, although they may not be hugely trendy, meet your primary needs at an affordable price. Stay flexible and question your thinking.
3. Stop spending for a year
Looking to build up your deposit? Then cancel all your spending for a year. Yes, it’s incredibly drastic, but there are people who have gone to huge lengths to pay down debts, save up money and transform their financial situation.
If you are serious about saving, rework your entire budget so that you are cutting out everything that is unnecessary. Make presents rather than buying them – or have a complete present amnesty. Stop going out and start holding games nights, sports evenings or pot luck food socials at yours. Make use of free facilities such as libraries and museums. Cycle or walk everywhere. Buy value food items, grow your own and cut out all food waste. Go through every bill and challenge it. Tell your friends and family what you are doing.
Yes, there will be people who are unsupportive or critical of your approach, but focus on your end goal and don’t allow yourself to be distracted. The end result of having a sizeable deposit will be well worth it!
4. Look at first-time buyer schemes
There are various incentives and help schemes available for first-time buyers, from the new Help to Buy ISA through to new-build deposit schemes where the developer pays a 5% deposit for you. Look around widely and find out what is available.
Some local authorities may even have incentives to encourage local people to buy properties that need renovation. Liverpool City Council famously sold some of its empty terrace houses for £1 if the new buyers agreed to live in them for 10 years in order to rebuild the wider community.
5. Ramp up your earnings
As well as slashing your outgoing costs, you need to increase your earnings as far as possible. Ask for a pay rise or switch jobs. Take on side gigs or start a business. Work at weekends, work overtime, sell unwanted items on ebay, tutor, walk dogs for a fee, sell crafts on Etsy… there are plenty of ways to earn on the side and build up your nest-egg. And, of course, while you’re working, you won’t be spending!
6. Look at alternative homes!
Do you even need a bricks and mortar home? Look at alternatives to challenge your thinking. The Tiny House movement has been taking off in countries such as the USA, Canada and Sweden – look online for inspiration and films! Some people live on houseboats and others build their own wooden cabins. Some convert shipping containers and others move into co-ops!
Don’t limit your thinking when it comes to securing your own home, especially if you are single or within a couple and have no children to think about. Consider, too, the number of people who live in RVs and travel the world…now that really has got you thinking, hasn’t it?
Like so many millennials, if you are determined to get on the housing ladder, your success will be determined by your actions, which are driven by your thoughts. So, challenge your assumptions, change the way you are viewing the problem and approach it in new ways to experience success.