Buying a home in your 20s or 30s is every young Australian’s dream and with good reason. There are compelling long term advantages to buying earlier in life, including a sense of independence, building fundamental budgeting skills and financial freedom.
Here, we explore the reasons why buying a property early in life can set you up for a better financial future.
Why Buy a Property Early?
If you’re thinking of buying a property early in life, there are plenty of reasons to justify it.
Aside from the obvious tax benefits, buying property early in life provides you with the opportunity to build a solid, long-term investment that can help you to achieve financial freedom. Let’s closely look at some of the benefits of investing in a house at an early age.
No More Renting
Renting is often seen as an expensive way of living. Rental payments are not only an unnecessary recurring expense (what is effectively rent on a mortgage), but they also often do not yield a tax deduction.
Buying a property and selling it later at a profit can also provide a tax deduction on the profit made. Property investing can also be a good way to generate income, and through careful planning, it can be a vehicle for superannuation contributions too.
Build a Portfolio
If you’re more interested in being a property investor than a homeowner, a house can be a good investment for you. By buying an investment property early in life, you can begin to accumulate property at a young age and build a portfolio that can provide passive income later in life.
Building a portfolio of properties can allow you to buy in one location and sell in another that might be more profitable.
For example, a property purchased in Sydney may be sold in Melbourne, where the cost of living is cheaper and the capital growth more substantial. This can be an effective way of building a portfolio of properties for little cost to you.
Planning for Retirement
One of the primary benefits of buying property early in life is that it can be an excellent way to plan for retirement.
If you do buy a home that you live in, and you rent out the other rooms to help pay the mortgage, you will have some extra budgeting and planning to do, but the financial benefits may be worth it.
This way, you can move out of your home and rent it out to pay the mortgage, then live in a smaller home that is paid off. Once the house you live in is rented out, you could use part of the money you receive to pay off your home and use the rest to live on.
Better Tax Breaks
Purchasing a home can also lead to some tax breaks.
If you are a first home buyer, then you may be able to use the First Home Owner Grant to help with the cost of the property purchase.
Additionally, once you have purchased a property, you can use it to claim a tax deduction on your mortgage repayments. While this is not as great as claiming it off rental income, it is a good way to offset the cost of buying a property, especially if you are a first-time buyer.
There are plenty of good reasons to buy a property early in life. If you do plan on purchasing a home, it is worth considering the tax breaks you will be getting, as well as the long term benefits that can come from investing in a property at an early age.
Buying a home all starts with applying for a loan. FinanceCorp is here to give you the right loan products that suit your needs and budget. You can trust our team to deliver great results and give you different options, from home loans to debt consolidation or even car loans. All of the Finance Managers at FinanceCorp are fully qualified, trained and experienced mortgage professionals who live and breathe finance. Work with us today, and let’s help you get the financing you need.