How much can I afford for a home?
I’m sure we’ve all asked ourselves this question at least once.\: “How much can I really afford?” There are a few factors that come into play to help determine how much you could borrow, but more importantly, how much you can afford to pay for the life of the loan.
It’s best to start with a budget. If you’d like some tips on how to manage your money better, we have a few pointers to get you started.
Once you have your budget together, you can consider your income, debts, monthly spending, etc. to determine how much you can afford. Also, check out our home loan calculators. They can help guide you on how much you can borrow and what your home loan repayments could be.
Finding a loan that suits you
Once you have an idea on how much you feel you could afford, it’s time to find a home loan. As you and your situation are unique to you, it can be difficult to determine which home loan fits you. With options for a fixed, variable, principal and interest or interest only loans, it can be a tiring process.
Now could be the right time to chat to your local Mortgage Choice broker. Talking to your local expert can help decide what would be a suitable choice for you. Better yet, they can help explain all the costs involved, break down any jargon and answer all of your questions.
Benefits of a pre-approved loan
Home loan pre-approval could also benefit you when wanting to move to the next (and very exciting) step of your journey. Pre-approval is generally valid for 3 months and gives you a good idea of how much you can actually spend on your property. The best part about pre-approval is that it can provide peace of mind before you hit the pavement in search of your new home and provide you with better negotiating power.
Let the hunt begin
It’s time to free up those weekends and start looking at open homes, speaking to a real estate agent and get a feel for what you like.
Your search will differ depending on what you’re looking for. Are you looking for a property to fix up? Do you want a house, an apartment or is this an investment property?
If you’re buying an investment property, you’ll need to consider factors such as rental income, rental yields, vacancy rates and capital growth.
If you’re looking to move into the property, you might want to ask yourself if it’s located somewhere convenient for you, if there’s parking as well as privacy. For more information and what to consider before purchasing a property, check out our ‘How to choose your property’ article.
At this stage, you’ll start looking around and making offers on properties that meet your needs. It’s good to brush up on your knowledge around private sales and auctions. Here’s a quick sum up:
If you’re looking to purchase a property in a private sale, you will be negotiating directly with the seller or their real estate agent. There are opportunities to conduct inspections after placing an offer. If anything is found after you receive the contract, there is a cooling-off period in which you can back out of the sale.
Auctions are a whole different experience. Purchasing a property at auction can be seen as more competitive and overwhelming. The highest bidder wins the property and there are no cooling-off periods (unless the seller has previously stated so). If you’re considering this option, here are some of our tips to buy at an auction with confidence.
Continue with the contracts
Once your offer is accepted, you will sign a contract for your new home. This is when you’ll need formal approval on your home loan, which your Mortgage Choice broker can help you with by guiding you through the process and paperwork.
If you have purchased your property through a private sale and there are no concerns resulting from the inspections and checks, you then proceed to complete the settlement. This is when you’ll find out when you can pick up your keys.
It’s time to pack up all of your items and move in to your new place. This can turn into an expensive exercise, so be sure to read up on our 5 ways to save when moving into a new home, to learn some tips to help save some money where possible.
Once you’re settled in, there may be unexpected expenses which come with purchasing a property and it’s worth the thought of creating an emergency savings fund. Paying a mortgage on top of your other expenses may also impact your cash flow. If you’d like to speak to a professional regarding your money management, contact your local Mortgage Choice Financial Adviser.
Most importantly, don’t set and forget your mortgage once you’re settled in. Contact your broker for a home loan check to make sure you’ve still got a home loan that suits your needs.
Wherever you are in your journey, talk to a Mortgage Choice broker today to help you on your way. Ask as many questions as you need and feel confident having an expert on your side.