Small Deposits Need Not Mean No Property Purchases

As prices continue to rise, new buyers continue to save for the magic number needed to place a deposit on their dream home. Unfortunately for many, the magic number keeps rising higher to follow the property prices. So what can you do if you have been saving for a home for ages, but still can’t afford one? Think apartments and investment properties instead of dream homes.

Start Small with an Apartment
Houses are very sought after pieces of property, especially ones with land and location. An apartment will not give you grass to mow, but can offer you the advantage of being close to the city centre and at a lower price than an actual house with land. By starting with an apartment as your first home, you can build up equity and decide if inner city living is what really floats your boat.

Look for an apartment larger than 40 square metres, as banks are unwilling to lend on small units. A two or three bedroom will have better resale prospects for the future, as will north facing apartments or ones with harbour views. However if a one bedroom is all you can afford, itís a better option than a studio apartment. Remember to look into the body corporate minutes before agreeing to the purchase, as this could save you from unwanted financial surprises in the future.

Think Investment Properties
If your deposit is too small for your dream house and land in the city, how about buying an investment property in another town instead? Regional areas may not be experiencing the same rise of capital growth that Auckland is, so house prices are not going to rocket up overnight. However they are going upwards, which means if you buy one at the right price and rent it successfully, you will gain equity in it.

The renter will pay your mortgage and cover the expenses for the property. This just means you need to continue to rent yourself until your property grows in value, which will give you enough equity to be able to purchase the dream home you always wanted. Just remember to get expert advice first before signing on the dotted line!