Is debt stopping you building your new home?
Don’t let debt get you down.
Fact is, if you really do want to build a new home, you can go from ‘owe’ to ‘go’ in 60 seconds. Well, maybe a touch more than 60 seconds … it all depends on how fast you read this blog. But as you’ll see below, you don’t have to give up on the idea of your first new home.
You just have to get a few important things in place first.
Be your own Treasurer
That means doing a budget. It means knowing exactly how much money you have coming in each week, and knowing exactly how much of it is being spent. Do this and you’ll be pretty amazed how, over the course of a year, you could be saving hundreds of dollars on all those ‘little’ things like coffees and lunches. All of which could instead go toward paying off your debt.
Yep, we know … this is easier said than done.
But when you look at your budget – the one you just promised to do around five seconds ago – you’ll quickly see places where savings can be made. Instead of ordering in pizza, for example, make it yourself. Tastes much better and you don’t get some pimply delivery guy waiting for a tip. And do you really need to spend so much on ride sharing each month? Catching a train or a bus can be way cheaper … and you don’t have to give the driver five stars every single time.
Have a word with your parents
Actually, not just your parents, but any family member who might be in a position to help.
Let’s say, for example, that your parents have paid off their home. They could then act as a ‘guarantor’ for you – by allowing the equity in their home to be used as an extra security for your loan.
This doesn’t mean that they pay off your mortgage. But it does mean that their property will provide a guarantee for your loan should you ever get into payment difficulties. It also means you could potentially save thousands in something called ‘lenders mortgage insurance’ or LMI. Once the guaranteed amount is paid off, you can then apply for your guarantor to be released.
Just one word of caution here. If you are thinking about asking a member of your family for their help, it’s important that both you and they know exactly what they are getting into – including all the obligations and potential pitfalls.
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The above information is provided for general informational purposes only and is not to be viewed as financial advice.