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Getting on the property ladder: What you need to know

house sold
(© Andrey Popov –

They say that renting is as good as throwing money away, and that it’s far smarter to invest in your own home. But, if you’re just starting out, getting that first foot on the property ladder can feel like an impossible dream. As a matter of fact, in the last 30 years or so, house prices around the world have skyrocketed at a much faster rate than inflation. And yet, we continue to hold fast to the far-off promise that one day we will make our last mortgage payment, and that will be it. The house will finally be ours.

Well, dare to dream. We read a great motivational message online recently:

A dream, written down with a date becomes a goal.
A goal, broken down into steps becomes a plan.
A plan, backed by action, makes your dreams come true.”

So put a date on paper and read our steps to get started.

Save a deposit

Of course we had to start with the hardest step. It’s going to take some serious discipline, a stable income and a side-hustle or two, but if you don’t earn a lot, or your earnings fluctuate, all is not lost. There is a lot of advice out there on how to save money on a low income.

The reason you need to save so much is that mortgage lenders have more confidence in you if you start off with a decent-sized deposit. The problem is that to save a decent deposit can take years and years.  Perseverance is key here.

Be realistic about where you can live

House prices in some areas are obviously much cheaper than others. If you can move to these areas, then you should start there. Remember that it is a property ladder, and that if you play your cards right, you will soon be able to sell and move up a rung or two to a better place. Also, don’t be fooled. Just because it’s cheaper doesn’t necessarily mean you’re getting lower quality. Some areas are more expensive simply because they are close to good schools or public transport. Do your research and compare prices. It’s important to shop around. You never know where you will find a good bargain.

Let’s talk money

So you’ve got your deposit ready, you’ve got your eye on a little place to call home, and you’re shopping around for a mortgage. Before you do this, though, don’t forget your other financial goals like saving for retirement or setting aside an emergency fund. Ideally you should have your emergency fund in place before you embark on the journey to home ownership. Your emergency fund should be large enough to cover your living expenses for up to a year, including estimated mortgage payments.

Financials in check, your next step is to find out how much you can borrow. Mortgages come in a variety of flavors, and the one that works best for you depends on your circumstances. Applying for a mortgage means you will need quite a bit of paperwork, and it’s worth noting that some banks require official documents to be sent via fax. If you have never sent a fax before, don’t worry. These days it’s a lot like sending an e-mail and can be done from your phone. This online fax review will help you to decide which one you need.

Essentially there are two main types of mortgages:

  • Fixed rate: The interest stays the same
  • Variable rate: The interest you pay can change

How do you decide between a fixed-rate mortgage and a variable rate mortgage? This is a topic worthy of a much longer article and it depends on a lot of factors, such as what country you’re in, what profession you’re in, and how old you are. That said, in a nutshell: you want to go with one that you can commit to without too much difficulty, and take into consideration your earning capacity over the time you need it for.

Story by Carolane De Palmas