Advertising
Advertising

7 Tips to Get on the Property Ladder

7 Tips to Get on the Property Ladder
house-oxford

    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.

    Advertising

    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.

    Advertising

    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.

    Advertising

    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.

    Advertising

    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

    More by this author

    7 Secrets of Being Popular 7 Tips for Writing Exam Essays Does the Internet Really Increase your Productivity? 10 Simple Tips for Using Email 7 Tips to Get on the Property Ladder

    Trending in Featured

    1 Becoming Self-Taught (The How-To Guide) 2 5 Steps To Move Out Of Stagnancy In Life 3 The Importance of Reminders (And How to Make a Reminder Work) 4 How to Master the Art of Prioritization 5 40 Top Productivity Apps for iPhone (2020 Updated)

    Read Next

    Advertising
    Advertising
    Advertising

    Last Updated on January 21, 2020

    Becoming Self-Taught (The How-To Guide)

    Becoming Self-Taught (The How-To Guide)

    Most of the skills I use to make a living are skills I’ve learned on my own: Web design, desktop publishing, marketing, personal productivity skills, even teaching! And most of what I know about science, politics, computers, art, guitar-playing, world history, writing, and a dozen other topics, I’ve picked up outside of any formal education.

    This is not to toot my own horn at all; if you stop to think about it, much of what you know how to do you’ve picked up on your own. But we rarely think about the process of becoming self-taught. This is too bad, because often, we shy away from things we don’t know how to do without stopping to think about how we might learn it — in many cases, fairly easily.

    The way you approach the world around you dictates to a great degree whether you will find learning something new easy or hard.

    The Keys to Learning Anything Easily

    Learning comes easily to people who have developed:

    Curiosity

    Being curious means you look forward to learning new things and are troubled by gaps in your understanding of the world. New words and ideas are received as challenges and the work of understanding them is embraced.

    People who lack curiosity see learning new things as a chore — or worse, as beyond their capacities.

    Patience

    Depending on the complexity of a topic, learning something new can take a long time. And it’s bound to be frustrating as you grapple with new terminologies, new models, and apparently irrelevant information.

    When you are learning something by yourself, there is nobody to control the flow of information, to make sure you move from basic knowledge to intermediate and finally advanced concepts.

    Advertising

    Patience with your topic, and more importantly with yourself is crucial — there’s no field of knowledge that someone in the world hasn’t managed to learn, starting from exactly where you are.

    A Feeling for Connectedness

    This is the hardest talent to cultivate, and is where most people flounder when approaching a new topic.

    A new body of knowledge is always easiest to learn if you can figure out the way it connects to what you already know. For years, I struggled with calculus in college until one day, my chemistry professor demonstrated how to do half-life calculations using integrals. From then on, calculus came much easier, because I had made a connection between a concept I understood well (the chemistry of half-lifes) and a field I had always struggled in (higher maths).

    The more you look for and pay attention to the connections between different fields, the more readily your mind will be able to latch onto new concepts.

    How to Self-Taught Effectively

    With a learning attitude in place, working your way into a new topic is simply a matter of research, practice, networking, and scheduling:

    1. Research

    Of course, the most important step in learning something new is actually finding out stuff about it. I tend to go through three distinct phases when I’m teaching myself a new topic:

    Learning the Basics

    Start as all things start today: Google it! Somehow people managed to learn before Google ( I learned HTML when Altavista was the best we got!) but nowadays a well-formed search on Google will get you a wealth of information on any topic in seconds.

    Advertising

    Surfing Wikipedia articles is a great way to get a basic grounding in a new field, too — and usually the Wikipedia entry for your search term will be on the first page of your Google search.

    What I look for is basic information and then the work of experts — blogs by researchers in a field, forums about a topic, organizational websites, magazines. I subscribe to a bunch of RSS feeds to keep up with new material as it’s posted, I print out articles to read in-depth later, and I look for the names of top authors or top books in the field.

    Hitting the Books

    Once I have a good outline of a field of knowledge, I hit the library. I look up the key names and titles I came across online, and then scan the shelves around those titles for other books that look interesting.

    Then, I go to the children’s section of the library and look up the same call numbers — a good overview for teens is probably going to be clearer, more concise, and more geared towards learning than many adult books.

    Long-Term Reference

    While I’m reading my stack of books from the library, I start keeping my eyes out for books I will want to give a permanent place on my shelves. I check online and brick-and-mortar bookstores, but also search thrift stores, used bookstores, library book sales, garage sales, wherever I happen to find myself in the presence of books.

    My goal is a collection of reference manuals and top books that I will come back to either to answer thorny questions or to refresh my knowledge as I put new skills into practice. And to do this cheaply and quickly.

    Advertising

    2. Practice

    Putting new knowledges into practice helps us develop better understandings now and remember more later. Although a lot of books offer exercises and self-tests, I prefer to jump right in and build something: a website, an essay, a desk, whatever.

    A great way to put any new body of knowledge into action is to start a blog on it — put it out there for the world to see and comment on.

    Just don’t lock your learning up in your head where nobody ever sees how much you know about something, and you never see how much you still don’t know.

    Check out this guide for useful techniques to help you practice efficiently: The Beginner’s Guide to Deliberate Practice

    3. Network

    One of the most powerful sources of knowledge and understanding in my life have been the social networks I have become embedded in over the years — the websites I write on, the LISTSERV I belong to, the people I talk with and present alongside at conferences, my colleagues in the department where I studied and the department where I now teach, and so on.

    These networks are crucial to extending my knowledge in areas I am already involved, and for referring me to contacts in areas where I have no prior experience. Joining an email list, emailing someone working in the field, asking colleagues for recommendations, all are useful ways of getting a foothold in a new field.

    Networking also allows you to test your newly-acquired knowledge against others’ understandings, giving you a chance to grow and further develop.

    Here find out How to Network So You’ll Get Way Ahead in Your Professional Life.

    Advertising

    4. Schedule

    For anything more complex than a simple overview, it pays to schedule time to commit to learning. Having the books on the shelf, the top websites bookmarked, and a string of contacts does no good if you don’t give yourself time to focus on reading, digesting, and implementing your knowledge.

    Give yourself a deadline, even if there is no externally imposed time limit, and work out a schedule to reach that deadline.

    Final Thoughts

    In a sense, even formal education is a form of self-guided learning — in the end, a teacher can only suggest and encourage a path to learning, at best cutting out some of the work of finding reliable sources to learn from.

    If you’re already working, or have a range of interests beside the purely academic, formal instruction may be too inconvenient or too expensive to undertake. That doesn’t mean you have to set aside the possibility of learning, though; history is full of self-taught successes.

    At its best, even a formal education is meant to prepare you for a life of self-guided learning; with the power of the Internet and the mass media at our disposal, there’s really no reason not to follow your muse wherever it may lead.

    More About Self-Learning

    Featured photo credit: Priscilla Du Preez via unsplash.com

    Read Next