The hardest part about embarking on a property investment journey on a very low income is getting the initial deposit together. You're going to want to aim for at least a 20% deposit plus fees, which is extremely daunting on a low income. When you have a smaller deposit than 20% you will probably need to pay mortgage insurance, which can be very expensive or the mortgage insurer may not let you borrow at all, so it is best to avoid it if you possibly can.
Some people on a low income will already have this much money but they might not know it. If you own your own house, you might have money in the form of equity but aren't aware that you can access it. The simplest way to access equity is to sell your house, usually by downsize.
Some people may suddenly find themselves without an income or on a pension but will have a large cash sum from a compensation payment or a severance package. Others may have a lump sum from a divorce or inheritance. Still others may have been overpaying their mortgage for years and have a large amount of redraw. These people may not be able to work again due to age, injury or other reasons but still want to set themselves up with a more secure financial future.
But many people on a low income don't have any money at all, or any assets they can sell or borrow against. It is these people that will find it the hardest to make any change to their financial future, especially if they aren't in a position to increase their income by other means such as finding better paid employment. If you are in this position, there are still some options:
- Reduce your expenses. If you are serious about getting ahead, you should be prepared to do whatever it takes. If you are already on a low income you are probably living a frugal life already so you will have to take more extreme steps, such as:
- selling your car and walking, cycling or using public transport
- moving into share accommodation or sharing your house.
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