How to Get on the Property Ladder as a Student

How to Get on the Property Ladder as a Student

For many students and young people in the US, getting on the property ladder seems like a pipe dream. In 2020, 56.3% of women aged 18-24 lived with their parents, with the figure rising to 60.1% for men in the same age range. Due to a tightening economy and shifting social norms, the number of students and young people living at home has reached a historic high. 

While getting on the housing market may be a little more challenging for young people nowadays, it is by no means impossible. Under certain circumstances, even students facing loan debt may find themselves in a position to buy a home. To help you get to grips with the property market and get savvy with your finances, we’ve put together a quick guide to purchasing property as a student.  

Why should students consider getting on the property ladder?

Purchasing a house has long been considered a safe and robust investment. Indeed, house prices have been rising quicker than inflation since the mid-1940s and have consistently outperformed the stock market.

What’s more, purchasing a home allows you to live rent-free once you’ve paid off the mortgage. The earlier on in life you get on the property ladder, the sooner you’ll be able to enjoy this financial freedom. While mortgages fluctuate over time, they usually become more affordable, particularly for graduates whose earnings rise significantly in their 30s or 40s.  

How can students afford a mortgage?

Everyone’s circumstances are different, and some students find getting on the property ladder easier than others thanks to inherited wealth or the price of properties in their chosen area. That said, there are several rules young people can follow to boost their chances of securing a first home. These include:

1. Save, save and save some more

Try to put aside as much money as possible to save up for a deposit. While this may sound a little boring, a larger deposit will increase mortgage lenders’ confidence in your financial stability. This will reassure them that you are unlikely to experience negative equity, and they will be more willing to lend large sums of money. If you’re struggling to save up, it may be worth living with your parents for a few months if you are able. It is also important to remember that small expenditures can add up quickly. If you’re spending hundreds of dollars on shoes and takeaway coffees every month, it may be time to go on a financial diet!

2. Consider a joint mortgage

While this may sound a little leftfield, an increasing number of young single students are combining their incomes so they can take out a joint mortgage. Of course, while purchasing with a friend will vastly increase the number of affordable homes, this option isn’t for everyone. Remember that you will only own 50% of the property, and a rupture in your friendship could create serious financial disputes further down the line. 

3. Borrow money from your parents

If you have a strong relationship with your parents and they’re relatively well off, borrowing money may be an option. While some students view this as a copout, it is important to remember that the younger generation faces more significant financial challenges than their parent’s generation. 

4. Move to an affordable area

House prices in some regions are much lower than in others. If you’re willing to move to the outskirts of your chosen city, you will find it much easier to get on the property ladder. Remember – getting on the property ladder could save you money in the long term, which could help you to afford a more desirable home in the center of town further down the line.

5. Consider rentvesting

So-called rentvesting has taken off among younger people in recent years. If you’ve never heard of it before, rentvesting is the practice of purchasing and letting out a property in an affordable area while continuing to rent in your preferred location. It is a smart solution for entrepreneurial students willing to put a little time and effort into maintaining an investment property. While it could help you to save up money for the home of your dreams, however, it is not without its risks. You may struggle to find tenants or stumble upon other financial roadblocks. Proceed with caution.

Don’t delay – start thinking about your future right now

Getting on the property ladder could significantly improve your financial future and give you a sense of stability in a changing world. If you’re looking to discover more about your options as a student, shop around for mortgage products or speak to a friendly real estate professional today!