I am a 24-year-old registered nurse who has been working for almost two years. My dream is to own a home within five years’ time, but I’m making a small amount of income that is mostly used to pay student loans and rent. Could you provide me with some financial advice on ways and methods to own my dream home within five years and to become financially stable?
– Lola
FINANCIAL ADVISER: How soon you are able to buy your dream house depends on the dream house you have in mind. Not many people are able to realise their dream house the first time they buy a house.
Quite often, they trade up or make enhancements to their house over time. Some of the very beautiful houses that you see around the country did not look that way when they were first built.
It would be useful to determine what you want and get an idea of the price so you can be guided in how you approach your dream, bearing in mind that its price will increase as time passes. You would also have to consider if you can accumulate the money required to make the deposit and to cover the closing costs.
The deposit could be as much as 10% to 20% of the purchase price depending on what you agree with the seller. The purchaser pays closing costs – the range of expenses incurred in settling the transaction. Some are shared with the seller and others are not.
Consider also the mortgage payment and your ability to pay that sum every month. To get a mortgage, you must be able to satisfy the mortgage-lending institution that you are able to meet your financial obligations to it. A mortgage-lending institution usually requires that borrowers earn a monthly income that is thrice as much as the monthly mortgage payment.
The cheapest route to home ownership is through the National Housing Trust (NHT) which lends to qualified contributors to build or to buy their home. I cannot guarantee that going this route will enable you to acquire your dream house, but you can still buy a decent house with the resources it is able to make available to you.
If you plan to buy, you could get an NHT scheme-house loan or an open-market loan. Should you decide to build, you could get a build-on-own-land loan or a construction loan, but you would need to own land on which to build.
Other loan facilities include the NHT serviced lot loan and house lot loan. All of these are non-homeowners loans, meaning that only contributors who do not own a house and have never received a benefit are eligible.
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