Saving for Your Dream Home

05 Jun 2023

Hey there, future homeowners! We’re going to jump into the realm of real estate and turn your dream of owning a house into a reality.

Buying a house isn’t something you can just wake up and decide to do on a whim because, well, it’s expensive and usually it’s a long-term investment so you’ll need to think about your future.

Let’s start by discussing the rent-to-buy transformation. We know that rent prices have been steadily climbing since 2010, and that’s a sign that they might keep going up. So, the longer you postpone home ownership, the more money you’ll pour into someone else’s pocket. But don’t worry, the housing market has its ups and downs. By keeping an eye out for dips in the market, you can pounce on favorable trends and make your move when your savings goals align with those trends.

Now, let’s talk about investing wisely. Gone are the days when stashing your savings in a traditional bank was the only option. Today’s savvy homebuyers are turning to Exchange-Traded Funds (ETFs) to turbocharge their savings. These funds are like supercharged savings accounts; if you have your money invested for a long-term goal, something 5 years or more, you’ll usually see your money grow faster than a savings account and outpace inflation.

ETFs are regulated by official European bodies that ensure your funds are protected and brokers explain all the risks involved. You can choose low-risk ETFs that still offer a favorable return. In fact, the LifeGoals Balanced ESG Portfolio is currently earning 3.87%, but if you can handle a little more risk, the LifeGoals Growth Portfolio is currently earning 6.66%. Of course, these numbers are constantly fluctuating with the market but compared to the average interest rate paid by savings accounts with European banks (2.41%), investing is a good alternative. Of course, investing comes with its fair share of risks, so it’s crucial to educate yourself about diversification, risk-reward relationships, and portfolio theory.

Now that you’ve thought about where you’re going to save your downpayment, It’s time to think about your first home wish list. Consider the cost of housing, location preferences, and construction styles that suit your taste. You might not be able to tick off everything on your wish list initially, so prioritize your must-haves while having some flexibility. Remember, compromise doesn’t mean sacrificing the essentials.

Let’s take a look at the European housing market. While housing prices have generally increased by 17% from 2010 to 2021, the situation varies across different Member States. Some countries have experienced house price decreases, with Greece and Cyprus leading the way. On the other hand, if you’re eyeing properties in Ireland, Luxembourg, or Denmark, be prepared for some higher price tags. It’s all about finding the sweet spot that suits your budget and aspirations.

When choosing your first home, don’t forget to factor in your mortgage and overall monthly expenses. Ideally, when you make a budget, you should spend about 50% of your net income on needs, including housing related costs. This number is important when you apply for a mortgage and decide how much your total housing costs should be.

Now, let’s explore the different home options available. Condos are trendy and perfect for singles or small families. They often come with awesome amenities, convenient locations, and the added benefit of community-building through homeowners’ associations, but often they can come with extra condo fees so make sure to factor that in. If you’re looking for more privacy but still want the benefits of shared amenities, consider a rowhouse. And when it’s time for your family to grow, a single-family home might be the way to go. With more space, various layout options, and maybe having some outdoor space, it’s the perfect fit for your evolving needs.

Remember, no matter which property style you choose or which phase of life you’re in, careful financial planning is key to a successful real estate investment. LifeGoals isn’t just a one-time tool; it can continue to assist you in reaching every financial goal. Whether you’re renovating your first home, upgrading to a bigger place, or even considering a vacation home, LifeGoals has your back with personalized plans.

So, my friends, let’s turn that dream of homeownership into a reality! With 70% of the European population owning their homes, it’s clear that your goals are within reach. Take the next step, make wise financial choices, and let LifeGoals guide you towards unlocking the door to your dream home. Our Goal Calculator is just a click away, waiting to help you embark on this thrilling financial adventure. Happy house hunting!