Many people believe that owning a home is a luxury reserved for those with excessive wealth and impeccable credit scores. However, in reality, there are numerous ways to purchase a property besides paying for it outright or taking a bank loan. Although these two methods are the most common, owning a home can become a reality for many more people when they discover alternate ways to pay for the deposit or monthly bond.
To qualify for a home loan, an applicant must meet strict criteria set by the bank. They must have a good credit score, a steady income that is sufficient to pay off monthly debt and enough money reserved for a secure deposit. These criteria automatically exclude many people, especially in developing countries. Around half of all home loan applications are denied by banks.
By thinking differently and being smart with your money, you could be able to afford a home of your own. It will take discipline and patience, but these alternate methods of buying a home have been proven to work for many individuals and families. Here are a few ways to buy a house without a bond.
This is one of the best ways to become a homeowner without having to pay for a lump-sum deposit. A person can negotiate an agreement with an estate agent or property owner whereby they pay a monthly rent for an extended period of time. Once these monthly rental payments equate to the value of the house, the title deeds may be transferred into the occupant’s name.
This method is quite popular, but is only likely if the current homeowner does not want to hold onto their investment property. If they are looking to sell, they will be more willing to enter a rent-to-own agreement with an occupant. You can always speak to your landlord about the possibility of signing such an agreement. They will then adjust the rental fee and work out the transfer of ownership agreement for both parties upon completion of the payments.
Save one income and live off the other
If you currently live in a two-income household, then the best way to be able to afford the deposit on a house is to live on one salary and save the other one. Most households have two or more people working for a living, so being frugal with your spending and planning a strict monthly budget can help to live off just one of those incomes.
Saving an entire month’s salary is the quickest way to build up enough for a deposit on a home. This method does require a cut-back on unnecessary expenses, such as eating out and going on holiday. But if this is manageable, then the ultimate reward of homeownership can be worth the sacrifice for a few years.
Find an investor
This option will not be suitable for some prospective homeowners, but certain individuals may have wealthy contacts or friends who are willing to pay for the deposit. If you can find someone with the capital to spend on your deposit, you may be able to negotiate a more affordable payback scheme with them.
Banks will offer a specific interest rate for a 20-year payment scheme if your home loan application is approved. A private investor, on the other hand, may be willing to take a lower monthly repayment for an extended period of time. Furthermore, if the investor only pays for the deposit, then repaying them will be much quicker than taking a 20-year bond from a bank.
Sell your current home and upgrade
Some homeowners may already be in the game but unable to afford a new home. If this is the case, then they could put their current house on the market and use some of the money from the sale to pay off a deposit on a bigger, better house. This method will still require a monthly bond payment, but most of the income from the sale of the old house can be used to pay off the new one.
This method works particularly well if you move to an area with a lower cost of living. This will allow the homeowner to get more bang from their buck and buy a bigger property in a cheaper suburb or town. Many people are unaware that they could be living in a more spacious house if they look outside of their preferred areas or cities. Selling a current home is one of the easiest ways to finance a new one and upgrade.
Partner with someone trustworthy and reliable
Footing the deposit for a new house can be cut in half by splitting the cost of the deposit with a housemate. However, this method can be very risky. You need to make sure that you trust your partner and that you can live with them for many years. They also need to be able to pay for half of the bond repayment every month.
Partnering with a family member or trustworthy colleague could open up new homeownership opportunities for people. Of course, the ownership of the house will also be split, but the benefits can sometimes outweigh the risks. This is also a good way to have your bond application approved as the bank is likely to grant the payment if two people are earning an income – their loan is more secure with two incomes making the repayments.
Search for a bargain house
Prospective homeowners should not jump at the first house that becomes available. Rather, spend a couple of months doing some proper online research and speak to various estate agents. This can open up new possibilities when it comes to bargain properties. You may find some fairly big properties for an affordable price by being patient and looking in the right places.
These ideas can allow more people to become homeowners around the world. Owning a property is not an exclusive luxury for few – it can be an affordable option for the majority of people who are willing to think outside the box and make a few sacrifices along the way.
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