Buying a home
Buying a home
Buying a home is as exciting as it is a big financial commitment. Getting prepared is the key.
How can I afford a property?
For some of us, the cost of property is so daunting we simply put it off.
Then prices could rise further, and we may feel like we’ve missed out.
Yes, getting on the housing ladder has risk attached, but owning property for many is still the Australian dream.
It makes sense to take your time and do your research to find what’s right for you. The key is finding an acceptable level of risk and having a robust, flexible plan that takes into account life’s twists and turns.
How much can I afford to borrow?
There are a plethora of online calculators that give you a quick idea of what you may be able to afford.
However, we recommend you speak with our mortgage broking partners understand your borrowing capacity. This will provide you with clarity about your limits and cashflow affordability.
Many things can affect your borrowing capacity including income, dependents, debts, credit history, credit card limits (you don’t need to owe anything on your credit card for your borrowing capacity to be affected).
What mortgage is right for me?
There are many different mortgages available, so it pays to shop around (or employ a mortgage broker to do all the heavy lifting for you) for the right one at a price you can afford.
Having an offset account, linked to your home loan is a way that reduces the interest you have to pay.
Whatever you decide, it’s worth doing your homework so you avoid any hidden costs. For instance, some mortgages may offer a reduced rate, but only for a short period. Keep in mind that variable rate loans are generally more flexible than those with a fixed rate. Although in times of low interest rates, it can make sense to secure a low rate for a fixed period.
We recommend you seek expert advice from our financial planners & our mortgage broker partners.
Savings/Investment tips
Saving for a house deposit doesn’t have to be a tiring and lengthy ordeal. However, it is not something that is easily achieved and does take a large amount of discipline and a well executed strategy.
It seems the longer you take to save your deposit the higher the price your house or investment property is going to be when you do get around to buying it.
Understand how much you need to save
Many first home buyers look to save 5% deposit & take advantage of the Government incentives (that ensure there is no stamp duty and no Lenders Mortgage Insurance - LMI).
Therefore, if you are looking at a:
$600,000 home = $30,000
$700,000 home = $35,000
Once you understand the figure, map out a plan to get there.
How much do you need to put away each pay to achieve your deposit. Will you be investing your savings or do you want to sit it in a separate bank account that you cannot touch.
Ensure there are checks and balances or accountability if you require that. Have a friend or family member check in to make sure you are on track to hit your goal.
If it does become overwhelming, speak to a profession, seek advice from one of our financial advisers who will be able to hold your hand throughout the journey.
Understand the Government Incentives/Grants you are entitled to
With both State & Federal Governments offering incentives and grants to first home buyers, it is essential to understand what you are entitled for and how this affects your savings & deposit required.
Be Smart With Your Money
Even though I don’t subscribe to the “just eat beans” or “give up the smashed avo” mentality of real estate blogs & magazines I do advocate being wise with your money.
Don’t force yourself to live just above the poverty line, but don’t be silly with your spending either.
Some people need someone to keep them accountable or put away their money that is out of mind and out of reach, where others have more self control and a born savers. Whatever type of saver you are, understand your strengths and weakness and seek help if needed.
Take It Straight Out Of Your Pay
Many of the great investors say words to the affect of automate your savings process.
Many of our clients having a % of their pay allocated to savings or investing automated each pay is a simplified process that works for them without much consideration.
This is where you take your savings straight out of your pay.
Don’t saving what is left after spending, spend what is left after saving - Warren Buffett
We’re not only wired to choose today over tomorrow, but we hate to feel like we’re losing out on something. The bottom line is, if we feel like we’re losing something we avoid it, we won’t do it. That’s why so many people don’t save and invest. Saving sounds like you’re giving something up, you’re losing something today. But you’re not – Tony Robbins
Buying something for $5-700,000 is a massive investment.
This may be one of your biggest purchases in your life - so seek advice from an expert or from someone who has done it recently (not someone who purchase a home in the 1980s when interest rates were 17% and do not understand the current responsible lending laws & State/Federal Government Grants.
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