The majority of Australians believe only those with “a lot of money” can hope to achieve the Great Australian Dream of home ownership.
According to Mortgage Choice's inaugural whitepaper The Evolving Great Australian Dream, 63.2% of all Australians believe only ‘rich people' can afford to buy a home.
While this is a startling statistic, it isn't surprising.
Across most markets – specifically Sydney and Melbourne – property prices continue to soar. At the same time, data from the Australian Bureau of Statistics shows wage growth continues to stall. As a result, it is becoming harder for many Australians – particularly first home buyers – to get their foot on the property ladder.
But while it is becoming harder to easily purchase affordable dwellings, it is not impossible. In fact, there are six easy steps that all first home buyers can follow to help them start their home buying journey sooner rather than later.
These steps can also help alleviate the stress associated with buying a property.
STEP 1: Start saving early
To obtain finance to buy a home, you'll need to show your preferred lender evidence of genuine savings. As a general rule of thumb, it is a good idea to have a deposit of at least 5% of the property's value. With the median property price across the combined capital cities rising to $570,000 in March, a 5% deposit is approximately $28,500. So with this in mind, it is a good idea to start the savings process sooner rather than later.
STEP 2: Take the time to find the right lender
With hundreds of home loan products on the market, you are bound to find one that is right for your needs – both now and into the future.
Of course, with so many products available, finding the right one can also feel like an overwhelming task – which is where your local broker comes in. Your local mortgage broker can explore the loan types available to you, including how much you can borrow and the deposit size you'll need. This will help you to set realistic savings targets and timeframes.
STEP 3: Put yourself first with pre-approval
Loan pre-approval lets you head into the purchase process knowing the maximum amount you have to spend on the property, giving you confidence to buy at auction or negotiate on price and saving you time looking at places that aren't in your price range. Keep in mind pre-approved finance is typically a limited time offer and it does not lock you into a loan.
STEP 4: Be a stickler for details
As with anything, the devil is in the detail. So once you have found a suitable property, it is important to go through the contract with a fine tooth comb and ensure that there is enough time built in for pest and building inspections. If making an offer on a property as opposed to buying at auction, check to see if the contract includes a cooling off period and/or ‘subject to finance' clause.
STEP 5: Finalise your finances
Once you've found a property you like, it's a good idea to get your finances sorted. To make the process as seamless as possible, you'll need to provide your local mortgage broker with up-to-date financial details. This includes verifying your current income, savings and assets, as well as liabilities, including any outstanding debts, loans, etc. We can provide you with a list of documentation you'll need.
STEP 6: Be budget savvy
Your local Mortgage Choice broker can help you negotiate the right loan for your needs and ensure the property settlement process is as seamless as possible. Once your property has settled, you will officially own the dwelling. But, before you get too excited, it is a good idea to gather as much information about the property you have just purchased from the real estate agent and vendor. Finding out information about the property will let you know how much things such as electricity and gas is going to cost you as well as when the strata and/or council rates are due. Having information about the property on hand will help you to budget accordingly.
Buying property is an exciting and rewarding process.
Before you say it is too hard and you will never afford to buy a home, make sure you speak with your local Mortgage Choice broker. We can help you every step of the way and make sure your home buying goals become a reality!