Buying your “future home” now, before you need it
31 March 2017 MO'R Mortgage Options
We’ve spoken to a few clients recently who are in the fortunate position to consider buying their ‘future home’ now, before they actually need it.
You might be happy in your current home – which is great! But if you know you’re likely to outgrow it in 5 years, have you thought about buying something bigger now and renting it out until you need to move in?
If your finances allow it, here are a few reasons why it can be a good idea.
You’re not buying and selling at the same time
Buying a property can be stressful and time consuming. Selling a property can be stressful and time consuming. So if you’re trying to do both at the same time, it’s fair to say you are going to have lots going on!
By separating the distinct processes, it gives you an opportunity to focus on each one properly, which hopefully increases your chances of doing both well!
It also means you won’t have ‘move in’ and ‘out’ dates to consider when negotiating, which possibly gives you an advantage over other buyers.
There are no time pressures
Because there’s no deadline to move out of your current home, you can take as much time as you need to find your future property. Of course, if the right property hasn’t come along and you’ve been searching for months and months… and months, it could indicate you need to adjust your expectations. (Or maybe you’ll just need to build your perfect home!)
A lack of time pressure also means you’re in no rush to sell. Again, this only works if you’re in a position to do so, but if you can hold off selling your old home until the time IS right, you might achieve a higher sale price.
You have a goal to work towards
Reducing expenditure or putting money aside for a future property purchase is hard when you don’t know what the property might look like. You’re saving for a theoretical new home but not sure how much you’ll need to save, by when, or if you’ll even need to save if you’re counting on proceeds from a sale.
Once you have a definitive goal (i.e. “We need $X in savings,”) and a linked reward (i.e. “We’ll move into our lovely new home and I’ll finally have enough room for a proper dining table!”), you might be pleasantly surprised at how fast your savings can grow.
Taxation advantages of owning investment property
Purchasing property as an investment is likely to have associated taxation benefits for you. Interest costs, depreciation, stamp duty – these are potentially items you will be able to claim as a result of buying the property as an investment. You will need to check with your accountant or ATO for more information on this.
Despite the best intentions, things won’t always go to plan. Between buying your ‘future home’ and actually moving in, things could change. There may be changes to your family structure, household income, interest rates, the property market, or you may change your mind as to where you want to live and the type of house you want to live in.
No one can guarantee the future. But by creating options for the future – when you can afford to do so – you could end up safeguarding yourself against changes you didn’t see coming. Providing you’re not super aggressive or push harder that your current finances allow and market conditions are favourable, the strategy of buying an investment property now – with the option of moving into at some point in the future – might be one to consider.
If this article has raised any questions, or you would like someone to review your situation to see what is possible, feel free to give our friendly staff a call or email