For every family dreaming of their perfect home, making the decision to buy is no easy one. After all, buying a home is more than likely to be one of the largest financial investments you make in your lifetime.
Not only is there the initial downpayment but there is also keeping up with the mortgage payments and add-ons including home insurance to consider. Home prices continue to rise across America and likewise in the UK, which means budding homeowners are tasked with coming up with larger deposits and inventive ways of funding their dream home.
While there is the traditional route of securing a mortgage and saving up for years, there are also a handful of other ways you can finance your perfect home and begin creating those memories sooner rather than later.
Consider Multigenerational And Shared Ownership
If you have decided how much house you can afford and still find yourself falling a bit short financially, consider sharing resources. In this case, it means joint ownership with either family members or home developers that offer a shared ownership scheme. Multigenerational living is on the rise and is by no means a new trend.
It also comes with its own set of benefits both financially and family wise. Senior consumers such as grandparents or aging parents now prefer to age at home and with their loved ones rather than at a dedicated retirement facility. It is also great having them around as it fosters a closer bond between all family members particularly children and their grandparents, and it provides a helping hand.
In addition, previous homeowners would have built up some equity in their previous home that they can utilize to cover a portion of the home purchase price. Seniors can use lenders offering access to their home equity and use this amount to boost the downpayment and budget for the new home. Reverse mortgages or home equity conversion mortgages are one of the most underutilized financial options but can prove to be a valuable one, according to Forbes This way you can afford your dream home, have your family close by and avoid insurmountable financial debts. Its a win-win for everyone.
However, this does not mean it is suitable for every family. You will need to consider the dynamics of your family and also the healthcare needs of any older family members you may be living with. To be successful in this kind of living situation, one must be prepared to have difficult conversations with family members and get in the habit of planning ahead.
Utilize Previous Equity Built Up
If you are moving from a previously owned home, chances are that you would have accrued equity on your previous home in the years you have lived there. Even with a 20 percent downpayment and a pre-approved mortgage amount, homeowners can find themselves falling short of the asking price.
If you intend on keeping your first home (possibly as an income source), you can simply remortgage your previous property and capitalize on built up equity and price appreciation. If you have managed to pay off your mortgage, then the amount of equity would be the value of your home. If you still have a mortgage remaining, calculate your built up equity using by subtracting your remaining mortgage debt from your current home value.
If you are an older homeowner, you can also opt for equity release which gives you access to a lump sum or monthly income from the built-up equity in your home. This can then be put towards the purchase of your dream home and comes with no repayment obligations until your death or move into long term care when the home is sold.
Go With A Project Home
Dream homes are built and personalized with certain criteria in mind, all of which come with a price tag. The fact is that not only are you paying for the cost of these amenities but you are also paying a markup percentage. Opting for a fixer-upper comes with a host of benefits for those families looking for their forever home. It allows for complete personalization which means you can build your home to fit all of your criteria.
Anyone that has been house hunting knows how rare it is to find a home that ticks every one of the buyer’s boxes. Financially, it is much more affordable since fixer uppers come with below market prices, saving you money. With budget-friendly and financially saving renovation tips, you can achieve your dreams and still come in under budget.
Every family dreams of having the perfect base to come home to, spend time in and create those treasured long lasting moments of happiness. However, securing your perfect home can come with a hefty price tag. This is where getting creative comes in useful. Think outside of the box when it comes to financing your forever home and don’t be afraid to be different. Before you know it, you can be moving your boxes into the home of your dreams.