Just owning any home is a dream for many people.
However, once you’re on the property ladder, you don’t have to be satisfied with your first home. A lot of people have a dream property in mind that they would love to live in one day.
But you don’t have to spend all your time dreaming about it when you could go out there and try to find it. Maybe you want a swanky flat in the city, a cosy cottage in the country or a luxury penthouse by the sea.
Whatever it is you’re after, you can make a plan to fund it. You won’t necessarily have it within a year or even five or ten, but it won’t happen at all if you don’t go after it.
Deciding on a Budget
You’ll need to decide how much you’re willing to spend on your dream house. When you’re thinking about this, there are a number of factors to take into account.
Perhaps you’re lucky enough to have the money upfront. If so, you’ll base your budget on what’s in your bank account. But it’s more likely that you’ll need a mortgage or funding from elsewhere.
You have to consider how likely it is you can get a large mortgage, either now or in the future. There are several things that lenders take into account.
They range from your salary to your spending habits. If the size of the mortgage you can get now isn’t as big as you would like it, it could improve in the future.
Image courtesy of Jeff Djevdet
Raising Initial Capital
When you buy your home, you have to make a deposit to secure the sale. If you’re not yet on the property ladder, getting hold of this money can be more difficult.
It can take several years to save up the cash you need, but you can make your money work harder. Put it into a savings account and plan to set aside a set amount each month.
If you already own your home, you still need the money for a deposit. However, it could be easier to raise it, as you’ll have equity from your current house.
Keep in mind that there are other costs too, such as mortgage fees and taxes.
Getting an Up-front Sum from Other Sources
You might also be able to borrow money from family. Or perhaps you even have an inheritance or existing assets. Some people’s parents or grandparents are kind enough to give them a sum to get them started.
It’s also possible to take out a loan to cover a mortgage deposit. However, many experts say that this isn’t always a great idea. If you do want to do that, you might consider doing it with a government scheme.
With Help to Buy, first-time homeowners can buy a house with as little as a 5% deposit. Then they can take out an equity loan for up to 20% of the property value.
Choosing Where to Live
Before you start looking for funding for your home, you should think about where you might want to live. You might have only considered the UK before, but there are opportunities in many other countries.
It’s easy to live anywhere in the EU, and you can buy property all over the world too. You don’t even have to live there permanently if you don’t want to.
Your dream house could be your second home, which you could stay in whenever you have the chance to get away.
You could spend your holidays in your luxury property in Cannes or make a new life for yourself in Spain.
Buying property abroad can be much cheaper, depending on where you buy. Even luxury properties can be substantially less expensive.
Securing a Mortgage
When you know which country you’re going to live in, you can begin to look for a mortgage. However, if you’re buying abroad, remember that the rules could work differently.
Apart from having a different mortgage process, the home buying process can be different too. For example, once a house goes on the market in Sweden, it can be sold in mere days.
Get to know the particulars before you start doing anything. It can also be a good idea to hire a property expert to help you.
Although it might differ slightly in different places, securing a mortgage is essentially about proving you can pay one back. Recent changes in the UK mean that lenders can scrutinise your spending habits.
On top of a squeaky clean credit history, you should also examine how you manage your money. Too many restaurant meals or nights quaffing champagne could make you look bad.
Considering Your Own Build
If you have a dream home in mind, buying a property isn’t your only option. Building your own home is another possibility if you can find the money to do it.
Of course, if you want to build a home from scratch, you’ll need a piece of land first. You may already have somewhere convenient, such as land owned by your family.
Selling an existing property or other assets to pay for the build is also a way to finance it. You could also combine different methods of paying for it.
These could include loans, a self-build mortgage and any private savings you have. You can build a home to your exact specifications. However, it can also be much more expensive than buying an existing property.
Renovating an Existing Home
There’s also another option, between buying a property that’s ready to go and building your own. Renovating a home is another way to turn it into your dream property.
If you decide to choose this route, you could pay for it through a combination of methods. You could use a mortgage, home improvement loans and cash.
It can often be less expensive to renovate a home than to buy one that’s immediately perfect for you.
Funding any home is difficult, but it’s harder if you have your heights set high. Just remember that you won’t be able to achieve your dream home right away.
