BIG DECISION - OVERSEAS TRAVEL OR BUY YOUR FIRST HOME?
- Written by Melanie Toye, February 28, 2012
Many young people today are making the big decision between buying a first home and travelling overseas for a holiday. When my husband and I had a large amount of money saved, we were wondering if we should take the big leap into buying our first home or going on a holiday to Europe. Deposit money or holiday money? After months of planning our trip overseas, right at the last minute we pulled out and decided our savings would be best suited towards buying a home and getting into the real estate market early in life.
Four years on, I still feel we have made the right decision. You can debate a long list of advantages and disadvantages for either buying a home or going on a holiday. At the end of the day, what made our decision easy was the thought of how long it took us to save for a deposit and if we went overseas, how many more years it would take before we could save another lump sum to buy a house. And, by that point, house prices would be even higher. And that is exactly what happened.
After two years, we upgraded using the equity of our first home to buy a bigger home that we really wanted in an area we loved. However, if we had waited two more years to buy our first home, house prices which have risen by quite an extent – even in this slow market – then we wouldn’t have been able to afford that same first home.
Once you buy a home, you make available more funds than you would have than if you had your money in a savings account. Can your savings account grow to $100,000 in 3 years by just sitting in the bank? Unlikely, but the equity in your house can.
Below are some points to consider when deciding if you should buy your first home:
- Speak with an Australian Mortgage Manager by phoning 1300 799 266 to discuss your options regarding the right mortgage for you. This will provide you with an idea on how much you can borrow and how much the repayment costs are.
- When the house prices are low, it is the best time to enter the market. As you don’t have a house to sell, you can enjoy the maximum benefit of low house prices. Buy at a low price now and sell at a high price down the track. This is the perfect time to buy your first home at a great price.
- Having a mortgage before you have children also helps. Paying additional repayments in the first few years will help decrease you home loan and interest.
- Mortgages do not tie you down; you just need to be flexible and creative in your approach. For example, when you do decide to go travelling you can rent out your home to cover the mortgage while you enjoy your holiday.
- Buying a home demonstrates to future lenders that you have the ability to make regular repayments and are dedicated in paying off your home loan. This will benefit you down the track when you may want to apply for a business loan or refinance your home loan.
If you do decide to buy your home, first know that you can still go travelling later on. Focus on building your savings and keep focused on your goal and you will achieve it. Be confident in knowing that you have made a great start in building your financial future.
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