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7 Tips to Get on the Property Ladder

7 Tips to Get on the Property Ladder
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    Despite the much publicised problems in the US Housing Market, there are still many long term advantages to buying a house in preference to renting.

    Buying a house has historically been a good investment; since 1945, house prices have increased faster than inflation and have also outperformed the stock market. Also, buying a house gives you the opportunity to live rent free when you have paid off the mortgage. Mortgages do fluctuate with interest rates. However, generally, mortgages become easier to pay over time. If your mortgage payments are currently $800 a month, this may seem alot, but if you income rises, then as a % of income, your mortgage will eventually fall.

    Despite the financial benefits, buying your first house can prove difficult because of the high prices we currently face.

    These are some tips for buying your first house.

    1. Save a deposit.

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    As soon as possible try to put money aside for a deposit. If you have a good sized deposit, mortgage lenders have more confidence in lending bigger amounts of money. This is because you are less likely to suffer from negative equity. The problem is that to save a decent % of a house can take many years of careful saving. However, with house prices currently stagnant, it has become a little easier.

    2. Borrow From Parents.

    Depending on your circumstances, this may be an option. There are several drawbacks to this approach. But, for many it provides the only realistic hope of getting on the property ladder. Parents may be able to release equity from the value of their house and lend you money (hopefully for a very low interest) this can provide the necessary deposit to buy your house. Many parents are willing to do this because they realise that their generation has benefited significantly from rising house prices. In extreme circumstances parents may be willing to act as a guarantor for your mortgage.

    3. Joint Mortgage.

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    It is becoming increasingly popular for young single people to combine their incomes with others so that they can afford a mortgage. Their own salary is insufficient. But, by buying with other people you effectively double your income, and this can enable you to buy a house. However, there are drawbacks. Firstly, you only will only own a 50% share in the house. Secondly, if you fall out with the other person, it can create an awkward situation, both financially and domestically.

    4. Interest Only Mortgage.

    This means you only pay interest on your mortgage loan. This means it is a cheaper repayment. However, there is a big disadvantage. At the end of the 30 year period, you still owe the entire mortgage loan. Interest only mortgages will only work if you can find an alternative way to invest in paying off the debt.

    5. 50 Year Mortgage.

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    A 50 year mortgage means that you spread repayments over 50 years rather than the standard 25 years. It means that monthly payments will be lower than a 25 year mortgage. The drawback is that you end up paying more interest payments over the course of the mortgage. However, it is likely to still be a better option than renting. Also, if you income increases in the future, you can always reduce the mortgage term at a later date.

    6. Move to a Cheaper Area.

    House prices in some areas are much cheaper. If you are willing to move to these areas then you can make buying a house a real possibility. Maybe in the future you can move back to more desirable areas. It is worth bearing in mind that cheaper areas do not always mean lower quality. For example, some areas have a premium because they are close to good schools. It is worth researching carefully average house prices in different areas.

    7. Self Certification Mortgage.

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    If you feel frustrated that banks won’t lend more than 3-4 times your income you might like to consider a self certification mortgage. Basically, a self certification mortgage enables you to state your likely income. In practise this can be a way to borrow more than under standard circumstances. Given the recent problems with sub prime mortgages it is advisable to be cautious when proceeding with this option. I mention it mainly because it is what I used to buy my first house, 3 years ago. Buying a house was a little more expensive than renting. But, self certificating was the only option to borrow enough capital. Do bear in mind, if you borrow a high income multiple (5 or 6 times income) you will struggle if interest rates rise significantly.

    Getting on the property ladder is not easy for our generation. It is likely you will have to make some sort of sacrifices. However, the alternative of renting is often even more unattractive. Which ever option you choose make sure you don’t go beyond your financial limitations.

    Tejvan Pettinger works as an Economics teacher in Oxford. He writes a blog about Mortgages and Finance. This Includes articles about the Housing Market, getting out of debt and paying off your mortgage early

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    Last Updated on March 31, 2020

    Is Procrastination Bad? The Truth About Procrastination Revealed

    Is Procrastination Bad? The Truth About Procrastination Revealed

    Procrastination is very literally the opposite of productivity. To produce something is to pull it forward, while to procrastinate is to push it forward — to tomorrow, to next week, or ultimately to never.

    Procrastination fills us with shame — we curse ourselves for our laziness, our inability to focus on the task at hand, our tendency to be easily led into easier and more immediate gratifications. And with good reason: for the most part, time spent procrastinating is time spent not doing things that are, in some way or other, important to us.

    There is a positive side to procrastination, but it’s important not to confuse procrastination at its best with everyday garden-variety procrastination.

    Sometimes — sometimes! — procrastination gives us the time we need to sort through a thorny issue or to generate ideas. In those rare instances, we should embrace procrastination — even as we push it away the rest of the time.

    Why We Procrastinate After All?

    We procrastinate for a number of reasons, some better than others. One reason we procrastinate is that, while we know what we want to do, we need time to let the ideas “ferment” before we are ready to sit down and put them into action.

    Some might call this “creative faffing”; I call it, following copywriter Ray Del Savio’s lead, “concepting”.[1]

    Whatever you choose to call it, it’s the time spent dreaming up what you want to say or do, weighing ideas in your mind, following false leads and tearing off on mental wild goose chases, and generally thinking things through.

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    To the outside observer, concepting looks like… well, like nothing much at all. Maybe you’re leaning back in your chair, feet up, staring at the wall or ceiling, or laying in bed apparently dozing, or looking out over the skyline or feeding pigeons in the park or fiddling with the Japanese vinyl toys that stand watch over your desk.

    If ideas are the lifeblood of your work, you have to make time for concepting, and you have to overcome the sensation— often overpowering in our work-obsessed culture — that faffing, however creative, is not work.

    Is Procrastination Bad?

    Yes it is.

    Don’t fool yourself into thinking that you’re “concepting” when in fact you’re just not sure what you’re supposed to be doing.

    Spending an hour staring at the wall while thinking up the perfect tagline for a marketing campaign is creative faffing; staring at the wall for an hour because you don’t know how to come up with a tagline, or don’t know the product you’re marketing well enough to come up with one, is just wasting time.

    Lack of definition is perhaps the biggest friend of your procrastination demons. When we’re not sure what to do — whether because we haven’t planned thoroughly enough, we haven’t specified the scope of what we hope to accomplish in the immediate present, or we lack important information, skills, or resources to get the job done.

    It’s easy to get distracted or to trick ourselves into spinning our wheels doing nothing. It takes our mind off the uncomfortable sensation of failing to make progress on something important.

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    The answer to this is in planning and scheduling. Rather than giving yourself an unspecified length of time to perform an unspecified task (“Let’s see, I guess I’ll work on that spreadsheet for a while”) give yourself a limited amount of time to work on a clearly defined task (“Now I’ll enter the figures from last months sales report into the spreadsheet for an hour”).

    Giving yourself a deadline, even an artificial one, helps build a sense of urgency and also offers the promise of time to “screw around” later, once more important things are done.

    For larger projects, planning plays a huge role in whether or not you’ll spend too much time procrastinating to reach the end reasonably quickly.

    A good plan not only lists the steps you have to take to reach the end, but takes into account the resources, knowledge and inputs from other people you’re going to need to perform those steps.

    Instead of futzing around doing nothing because you don’t have last month’s sales report, getting the report should be a step in the project.

    Otherwise, you’ll spend time cooling your heels, justifying your lack of action as necessary: you aren’t wasting time because you want to, but because you have to.

    How Bad Procrastination Can Be

    Our mind can often trick us into procrastinating, often to the point that we don’t realize we’re procrastinating at all.

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    After all, we have lots and lots of things to do; if we’re working on something, aren’t we being productive – even if the one big thing we need to work on doesn’t get done?

    One way this plays out is that we scan our to-do list, skipping over the big challenging projects in favor of the short, easy projects. At the end of the day, we feel very productive: we’ve crossed twelve things off our list!

    That big project we didn’t work on gets put onto the next day’s list, and when the same thing happens, it gets moved forward again. And again.

    Big tasks often present us with the problem above – we aren’t sure what to do exactly, so we look for other ways to occupy ourselves.

    In many cases too, big tasks aren’t really tasks at all; they’re aggregates of many smaller tasks. If something’s sitting on your list for a long time, each day getting skipped over in favor of more immediately doable tasks, it’s probably not very well thought out.

    You’re actively resisting it because you don’t really know what it is. Try to break it down into a set of small tasks, something more like the tasks you are doing in place of the one big task you aren’t doing.

    More consequences of procrastination can be found in this article: 8 Dreadful Effects of Procrastination That Can Destroy Your Life

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    Procrastination, a Technical Failure

    Procrastination is, more often than not, a sign of a technical failure, not a moral failure.

    It’s not because we’re bad people that we procrastinate. Most times, procrastination serves as a symptom of something more fundamentally wrong with the tasks we’ve set ourselves.

    It’s important to keep an eye on our procrastinating tendencies, to ask ourselves whenever we notice ourselves pushing things forward what it is about the task we’ve set ourselves that simply isn’t working for us.

    Learn more about how to fix your procrastination problem here: What Is Procrastination and How to Stop It (The Complete Guide)

    Featured photo credit: chuttersnap via unsplash.com

    Reference

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