Affording a Home on a Single Income
If you are part of a single-income household then you probably think that you will never afford your own home.
Life is expensive and houses even more so. But this should not necessarily be an obstacle to you.
Many homeowners live off of a single income and they make it work. It's all about making slight changes to your current lifestyle and knowing what the state of your finances is.
Here are a few ways that you can afford your dream home on a single income:
#1 - Research your affordability
The first step is to be realistic about what you can afford. This will prevent you from falling into an endless hole of debt.
When checking your affordability, be sure to leave enough breathing room, too. You don't want to be in a position where you can't afford the bond repayments when the interest rate increases.
Work with what your household can currently afford and remember to work within your means.
Also be sure to calculate how much money you need to have to pay things like utility bills, homeowners insurance, and your own monthly bills.
#2 - Invest your single income in an asset that appreciates over time
It is better to buy a house than to rent if you have a single-income household.
Landlords usually increase their rent every year and your money pays off someone else's bond. If you buy a house, you invest your money into an appreciating asset that can be liquidated in the case of an emergency.
You can also choose to take out an access bond. This allows you to use the home loan as a savings account if you need it. And, if push comes to shove, then you can sell the house for money which is something you can't do when renting.
#3 - Supplement your single income
Many people have side-hustles to supplement their single income.
With the internet and technology, it is easy to find an extra job that matches your skill and work remotely in your free time.
You can also start your own business on the side where you use your skill or your profession to make extra money. There are a lot of companies out there that are looking for freelancers to assist with the workload. These jobs are often flexible, so you can choose your hours and the amount of work that you take on.
#4 - Rent out a room in your home
If you have extra rooms in your house, you can easily rent them out to other people. A room is much cheaper than a cottage or a flat which is why it appeals to so many renters.
Renting out a room does not have to be a long-term situation. You can rent it out for as long as you need or you can list the room on Airbnb.
Whichever option you decide on, make sure that your tenant knows what the duration of the rental agreement is and what the conditions are.
#5 - Downscale your home
If you have no other choice, you might have to consider downscaling your home.
Be sure to factor in all the costs associated with selling a home. Sellers often forget about things like bond cancellation fees, agent commission fees, and home inspection fees.
You need to consider all of the expenses before you can determine what you can afford when buying a new house.
Earning a single income does not have to be an obstacle in your home-buying journey. There is always a practical solution around every bend. You just need to know where to look!