Living at home rent free? How to best make use of this opportunity.

Living at home rent-free is a golden opportunity, and if you're in this fortunate position, it's time to capitalise on it. This period is potentially the best time to consider buying a property, especially an investment property. Here's why and how you should make the most of this chance.

Maximise Your Savings

With minimal living costs and expenses, the ability to save money is significantly enhanced. Not having to pay rent allows you to accumulate a substantial amount of savings, which is crucial for your future financial stability. This advantage is something you should leverage fully. Here’s how to go about it:

Set a Savings Goal: Determine how much you need for a down payment and set a realistic timeline.
Automate Savings: Set up automatic transfers to your savings account to ensure consistency.
Track Expenses: Monitor your spending to avoid unnecessary expenditures and maximise savings.

Benefits Beyond the Deposit

The benefits of living at home rent-free extend beyond just saving for a deposit. Your borrowing capacity is also significantly higher. Here's how it works:

Higher Loan Amounts: Banks are more likely to lend you a larger sum if you have substantial savings and lower living expenses.
Investment Properties: If you’re looking to buy an investment property, your financial profile becomes even more attractive to lenders. They see you as a lower risk because you have more disposable income.

The Realities of Moving Out

Once you move out, saving money becomes much harder due to increased expenses. Here’s what you’ll face:

Higher Living Costs: Rent, utilities, groceries, and other living expenses will consume a large portion of your income.
Unplanned Expenses: Moving out often brings unexpected costs, such as furniture, kitchen appliances, and other household items.

Complications of Shared Living

If you're considering living with roommates or a partner, be aware of the potential complications:

Shared Lease Agreements: Lenders often consider the full lease commitment when you’re on a shared lease, which can impact your loan eligibility.
De facto Relationships: If you’re in a de facto relationship but not ready to buy together, lenders typically factor in the living costs of two people and treat your partner as a dependent without considering their income. This can complicate your borrowing capacity.

Make the Most of the Opportunity

If you have the option to stay at home rent-free, do so for as long as possible. Use this time to save diligently and prepare for entering the property market. Here are some final tips:

Educate Yourself: Learn about the property market and understand the buying process.
Seek Professional Advice: Consult with financial advisors or mortgage brokers to get tailored advice.
Stay Disciplined: Resist the temptation to spend your savings on non-essential items.

Taking advantage of this unique opportunity to save and invest wisely can set you up for long-term financial success. Don't waste this chance. Your future self will thank you for it.