Having your own home is an aspiration for most Australians, but making it a reality requires some thought – and some of that thought might be required sooner rather than later.
Here are eight questions that anyone thinking about buying their first home should ask themselves, so the fantasy of home ownership can turn into a solid plan of action.
Do I really want this or am I just trying to keep up with the Joneses?
Our colleagues, family, friends, the media are constantly talking about property ownership.
The concept of having the great Aussie dream has been drummed in to us at a young age so the very first question you should ask is whether owning a home is a genuine ambition, or just something you feel you should do.
An honest answer to this question could change your path altogether.
Can I really afford it?
The next question is probably the most obvious and that’s to ask yourself whether your current salary and potential for future earnings puts you in a good position to consider buying a property.
Are you in a position to do it on your own or will you need the finances of a partner or family member to make it a reality?
Are property prices now a reflection of what they’ll be when you’re ready to enter the market?
Mapping our your finances – by way of a budget – will give you a solid idea of how much you’ll need for a purchase and therefore when you’ll be in a position to buy and what you need to do to get there.
What’s my long term plan for the property?
Is the property an investment to rent out, a property to “flip”, where you want to live for the next five years or to settle down for a long time?
The answers to these questions will play a big part in your borrowing amount and where you start your property search.
Where do I want to buy?
If you’re investing in a property purely for rental returns, it may be cheaper to buy in a regional growth area or interstate and this could lower your purchase budget, but add more to your travel and maintenance costs.
Establishing whether you’re buying to invest or live will have a big impact your buying location, especially when it comes to proximity to transport, schools and shops.
And while it can give you a better yield, it may not deliver as strong when it comes to capital growth.
When do I want to buy?
If the idea of property ownership is growing in appeal after answering the previous questions, you can now establish a rough timeline of when you think you’ll be in a good position to buy, both financially and mentally.
Also, now’s the time to ask yourself, is there one last holiday you want to take before paying a monthly mortgage or do you want to finish some study which could give you more earning power?
How do I get started?
Now that you’ve established a property type, location and approximate loan amount, the process has unofficially begun.
You’ll either be in a position to start doing your research to purchase a property or start your savings plan to build your loan deposit.
This is a good time to research what’s involved with taking out a home loan.
Understanding the process, what extra costs you’re up for and the terminology you’ll be hearing will really help.
Either way, having a goal in sight is going to focus your plans and get you the keys to your first property sooner than you first thought.
How do I go about getting a home loan?
At this point, taking out a home loan can seem daunting but remember you’ve done your research so you know more than you think and this will come in handy when it comes to choosing a lender.
Do you want a fixed or variable rate home loan, do you want to stick with your current bank for a home loan?
What are the up-front fees and are there any discounts available?
Depending on whether you’re an investor or an owner occupier could also dictate your rate and the LVR you’re able to borrow on.
Whether you’re saving or repaying mortgage, you’re on your way to owning your own piece of property and while it may seem stressful, it will become manageable and just another part of your monthly finances.
So, don’t hibernate and be a slave to your mortgage – find a way to continue to do the things you love and instead of making major sacrifices make small compromises along the way.