Are you ready to buy a home? Consider these 5 things first?
Many people we speak to are considering whether or not it is their time to buy a home. Every home buyer should consider a few important things before taking the plunge into home ownership. Many home buyers are poorly prepared – you can help ensure you make a great buying decision by doing some essential research and preparation.
Here are five things that you need to consider before buying a home:
- Understand your family’s finance needs:
Understand your complete financial picture and needs, so that you’re fully prepared to apply for a mortgage when the time is right. Understand your existing assets, debts and your cashflow. How much is your borrowing capacity and get pre-approved before embarking on your house hunt. You may not be able to borrow as much as you’d like – and before getting passionate about that property that is above budget and potentially stretching your finances, really consider if what you can comfortably afford. Ideally, seek the services of an financial planner who can help you to estimate total buying costs, model the cashflow implications of your potential purchase and consider asset structuring and potential tax incentives. These considerations can make thousands of dollars of different to affordability and most people overlook engaging professionals.
- ‘Stress Test’ different Mortgage Rate Scenarios:
A mortgage is usually a 25-30 year commitment. Find out how much you can afford based on current interest rates and ALSO understand what if scenarios such as ‘What if interest rates increase by 2% or 3%?’, ‘What happens if you do not work for 6 months?’ Or for investors, ‘What happens if your rental property is vacant for two months?’ ‘What happens if you have an unexpected repair bill and the air conditioner needs to be replaced at a cost of $5K?’ Do you have the savings and income to pay for these items and can you still afford to pay your mortgage at these times?
- Choose the Right Mortgage:
Ensure you are getting the right mortgage product and this is best achieved through using an independent finance broker who has access to a range of lenders and finance products. Don’t just go to a bank’s website and use the calculators to see how much you can borrow and assume you’ll get a loan. There’s a big difference between what the banks indicate they can lend you and what they actually will. It’s important to pick your finance package carefully, the different can mean thousands to your cashflow each year. Engage professionals and get the best deal for your circumstances.
- Don’t get Love Struck and buy at any cost – instead Buy Less than you can Afford:
We all know this feeling. Whether we are buying a home, a car or clothes, going into the store and buying the expensive item because it just looks that much more appealing – we just have to have it. Warning – just don’t do it. The more you spend, the greater your loan and the larger your home the greater your expenses related to that home are likely to be. Think higher utility bills, higher stamp duty, higher land tax, higher insurance premiums, if you’re refurbishing then more sqm means higher renovation costs. The list goes on. In the moment of frenzied buying you may say – What’s a few thousand between friends? Well it’s cash for school fees, holidays, money to pay off your mortgage quicker….
It’s not a great feeling being ‘house poor’ and feeling financially stretched – Buying a house you can easily afford can mean the difference between having extra money to pay for important things, medical, holidays, children’s expenses – as opposed to being house-poor and unable to afford much of anything. Relax and do yourself a favour – don’t stretch yourself. And if you find it difficult to resist looking at properties just above your price range or don’t trust yourself to stay within budget while bidding at an auction – then engage the services of an independent buyer’s agent who will work strictly to your budget and brief. A buyer’s agent won’t look at properties outside of your budget, nor will they let emotions get away and overbid at auctions.
- Fed up trying to find your ideal Property – don’t buy in desperation:
You may be outbid to someone else who has more money to spend, or you just keep missing out on your ideal properties, or you feel mislead about the guide prices – and you actually can’t afford your dream property. You may be disheartened, but don’t buy in desperation, don’t buy something that is unreasonable – stay focused and stick to finding a property that will meet your requirements and resist buying because you are fed up. Consider if you can stop looking for a while or better still get a buyer’s agent on your side to save you the time, someone who can do the running around for you and attend 20+ viewings potentially per week for you, someone dedicated to finding a property that matches your brief, someone who knows what a property is actually worth and someone who has your best interests in mind.
If you’re a buyer who has considered these five questions, you may be ready to buy a home! Contact Lesley Gregg at Newfandangled Properties, dedicated buyer’s agents who have your best interests in mind as the property buyer – get Lesley and her team searching for your ideal property at the right price today! Call 0415 060 605 Email firstname.lastname@example.org