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Owning a Second Home on a Tight Budget

If your first home wasn’t a big enough investment already, then your second home definitely will be. But you’re probably sitting there thinking “why?”. Why invest in a second home when the first one is already taking up most of your salary, and why would you even need to own a second one anyway?

two storey house

If your first home wasn’t a big enough investment already, then your second home definitely will be. But you’re probably sitting there thinking “why?”. Why invest in a second home when the first one is already taking up most of your salary, and why would you even need to own a second one anyway?

There are many advantages to owning a second home. For starters, it’s a long-term investment that pays off very well in the future. Property usually gains value over time, meaning that if you invest in something today, it’ll be worth a lot more money a few years or even decades down the line. The house can be used to rent out to tenants and make more money, it can be passed down to your children, or you could turn it into a retirement home and hand your current one down to your children. It could also become a holiday home for you and your family to use whenever you see fit, and this is especially useful if you’ve decided to purchase the second home in a distant town or even another country. It goes without saying that owning a second home can become a great investment, but can you do it even while sticking to a tight budget to pay off your current one? Absolutely.

With some smart budgeting tricks and careful considerations, it’s possible to pay for a second home while you finish off paying for your current one, and here are a couple of tips to help you do just that.

Start saving and learn to budget correctly

The first major hurdle is getting into the mindset of saving money once again. You’ve probably done this in the past to save up for your first home, and it should come as no surprise that you have to do it all over again just to afford your second home. During the time between saving for your first deposit till now, you’ve probably built up some great habits that will help you save more money the second time around. Perhaps you’ve got another job now that pays more, or maybe you stuck to some frugal practices that you adopted the first time you decided to save money. Whatever the case may be, you have to remember how you saved money in the first place and subject yourself to a frugal lifestyle once again. Calculate your income, tally up your expenses, and if every dollar has a name, then you’re good to go. However, if your dollars don’t quite add up and you’re still using up more money than you have, then you should take a look at your expenses in order to cut down on spending.

Look for the newest developments

It’s important to be patient when picking out a second home. There’s not as much pressure as your first home because it doesn’t need to be perfect and you aren’t in a hurry to put a roof over your head. With your second home, you should be looking at new developments such as Meriton Apartments in order to get a good feel for the prices and amenities that will be worth your money. New developments are also typically cheaper because they allow you to invest straight away into a property and reserve your spot. In addition, you also get the added bonus of having finance options straight from the developer instead of going through a third party such as a bank or a loan service. This helps cut down the overall cost of purchasing a new home and can make things a little more affordable. The best place to look for new developments is usually on the internet. In some cases, a local estate agent might tell you about new properties being built, but they’ll likely try to sell you properties that they have already reserved. If you’re lucky, the property development in question might still have places for sale, but they’re generally sold out really quickly due to their demand so you might want to stay active in property development social circles and keep a lookout.

Renting to own schemes

Mortgages can be scary and the idea of building up a huge deposit for the property can be daunting. Luckily, there are schemes called rent-to-buy that allow you to move straight away into a new property and have the option to purchase it later in the future. The rent is usually a little higher than a property that is purely for rental purposes, but you’re offered the chance to put the money you pay towards buying the entire home. However, it’s important to look at the contract and get a full understanding of what you’re getting into. Some contracts state that you have the right to buy the home, but you aren’t obligated to do so. Other contacts lock you into a purchase and you must buy the home at the end of your lease period. You need to clarify what the wording means before getting yourself into a rent-to-own scheme, which is why many people refer to a real estate attorney to help them decipher any cryptic words. There are a few advantages to renting to own that might not be completely obvious. For starters, many of the maintenance fees are still paid by the landlord, meaning you don’t need to spend as much money on repairs. You also have the ability to move into a home straight away, reducing the amount of time you need to wait until you actually have a roof over your head. This can be great if there are unexpected family problems that force you to purchase a second home sooner than later.

Stop looking for the perfect home

Lastly, it’s a good idea to make some compromises. As mentioned before, you don’t have to look for the perfect home because you already have a home. If the garden isn’t as big as you would like, then so what? Perhaps the view isn’t absolutely perfect or maybe it’s lacking one or two local amenities that you would prefer to have. Stop searching for the perfect second home and learn to make a few compromises that will ultimately lower the price and make purchasing a second home more affordable for you.