A Guide to Investing for Under 30’s

by Dec 26, 2016Mortgages, Property investment

investing in property in your twenties

Buying an investment property is a big commitment for anyone, especially for young adults looking to buy in a competitive property market. Saving for a deposit, keeping up with mortgage repayments and looking for the right property are just the tip of the iceberg.

Investors under 30 face unique challenges while trying to get on the property ladder. But with a good mindset, careful planning and extensive research, you can achieve your investment goals. Below we list ways young investors can overcome barriers and successfully enter the property market.

Be Disciplined with Your Money

House prices are going up faster than young people are saving. Studying, overseas travel, and time with friends are common hurdles for young people. But disciplined saving is the most effective way to meet the initial home deposit.

Ensuring you save more than you spend will go a long way. It may be a simple concept, but it’s one that plenty of people manage to get wrong. If you take on debt, ensure it is good debt, meaning you never borrow money to buy depreciating assets like a car or phone.

Explore Creative Ways to Meet the Deposit

Affording an initial home deposit is one of the biggest barriers to buying a property. Fortunately, there are a number of unconventional ways to get the money together. You could use contributions from your KiwiSaver account or, if you are eligible, apply for the HomeStart grant under the scheme.

If your parents are homeowners, they can also provide support by acting as guarantors. They can leverage the equity in their property to secure a home loan for you. You should also find a mortgage lender who offers low deposit loans. iLender offers loans with deposits of as low as 10 per cent.

Manage Your Expectations

Investing is all about numbers. Understanding how a good investment property looks and feels is one of the first things you need to do. Remember to avoid making emotional decisions when looking at investment properties. Maintain a critical perspective and thoroughly complete due diligence processes even when an opportunity seems perfect.

There is often a big difference between a property you think would be nice to live in and one that will make a good investment. Be prepared to thoroughly research areas you’re unfamiliar with. Look at properties that are rough around the edges and in locations that aren’t as popular.

Do Your Research

Knowledge is the difference between investing and gambling. Mistakes in property investment are very expensive, taking many investors years to recover from financially. With limited finances, young investors absolutely need to ensure they know what is happening in the property market and the areas they’re looking in.

Get a good understanding of cash flow, rental yields, capital gains and the various mortgage structures that are available. Different options have their own advantages depending on the investor and their individual circumstances.

Stay Positive

Investing while you’re young means you have to make sacrifices. Having a clear strategy and a positive mindset will help you prepare for your investment endeavor. Remember that the sooner you begin investing, the greater the benefits will be in the long term.

The financial stability and freedom you are creating far outweigh any sacrifices you make now. Keep that in mind when your peers go travelling or out for an expensive meal.

iLender is Here to Help

If you need assistance or advice with any aspect of property investment in New Zealand, we’re here to help. Our expert mortgage brokers have the knowledge and experience to help young investors get onto the property ladder and achieve their goals.

Call us today on 0800 LENDER (0800-536-337) or contact us online.

About iLender

At iLender we put your best interests first and not the Bank – our advice is unbiased as all Lenders who we do business with pay about the same in commissions.

Although we are Auckland based Mortgage Brokers, we help customers everywhere in New Zealand and overseas with buying property in New Zealand, as we are very much about online and giving advice here and now!

The 5 big benefits of Property Investing

Rental property is a popular and profitable form of investment. Buying the right investment property can provide strong capital gains and regular income, while being able to leverage real estate opens up new opportunities for creating wealth.  Thinking about...

How to get a mortgage when you are Self-Employed

There’s a lot to be said for working for yourself. Whether you’re a freelancer, contractor, or small business owner, striking out on your own offers a sense of opportunity that’s hard to find in salaried roles. However, self-employment can make things tricky when it...

Government Housing policy changes – March 2021

Can they work or is there ‘an elephant in the room’? A lot of comment has been made around the Government’s changes to Residential Property Investment over the last few days, so I thought commentary from me, with nearly 30 years in Property Finance, might bring some...

What kind of loans can I get with bad credit?

A few financial slip-ups in the past can have a surprisingly big impact on your credit rating. A bad credit rating indicates that you may be a risky borrower, which can make it difficult to get the bank’s approval when the time comes to apply for a home loan....

LVR changes and what do they mean for you?

Background In 2013 the Reserve Bank introduced LVR restrictions to curb a potential overheating of the property market. As a rule, owner occupiers needed a 20% deposit and investors 40%, later reduced to 30%. There was some leeway with banks able to lend a very small...

Getting a home loan: What to do when the bank says “No”

It’s easy to feel discouraged when a bank rejects your home loan application, but it’s important that you do have other options when it comes to securing a mortgage. Non-bank lending can be an excellent option for home buyers who have had their mortgage applications...

Credit searches – What to know before you apply for a Mortgage or Loan

All Lenders use a credit search as part of their assessment of a Mortgage or Loan Application and there are some things that are important to know. Some Lenders use a credit scoring system, some don’t. Credit Scoring Mainstream lenders use a credit scoring system and...

More Reasons To Be Cheerful

Upturn in House Prices… A couple of the major Banks are predicting house prices to increase by up to 7 per cent next year with the property market due to "spring back to life". This is a welcomed announcement as it comes on the back of a fairly quiet winter - so signs...

Can I get a home loan with bad credit?

Getting a mortgage can be challenging if you have bad credit or no credit history. Banks tend to perceive you as more of a risk and are generally less inclined to approve your home loan application.  But that doesn’t mean it’s impossible to get a mortgage. Here...

The truth about mortgages, interest rates, the housing market and everything else the media likes to sensationalise!

  'House prices down' 'First home buyers finding it impossible' 'Investors exiting the market' Such headlines are gross exaggerations and often blatant misrepresentations of the truth. The Housing Market This is flat, but stable. QV (NZ's leading provider of...

Best mortgage rates, 10% deposit owner occupied and 20% rental purchase, self employed with no financials and help for those with bad credit or arrears.

Hundreds of reviews on TradeMe and Google makes us your ‘Number 1’ choice.

Call 0800 536 337