Rising rents and a lack of available rental properties is encouraging many Australians to give serious merit to home ownership. Many first homebuyers find that paying rent whilst attempting to save enough money for a home loan deposit is a challenging feat. However, the cost comparison between monthly rent and loan repayments within some areas is encouraging for potential buyers. Those who understand their limitations, options and opportunities, and are committed to their goal, are more likely live in their own home sooner.
Achieving property ownership does require careful thought and consideration of a range of aspects. Prospective buyers will have to plan everything from their savings plan to the commencement date of their property hunt and right through to maintaining and repaying a home loan. For these reasons and many more, buying property is not a decision that should be made lightly.
Before jumping in head first, borrowers should keep in mind there is a range of costs, other than the property purchase price, associated with home ownership. Buyers will need to budget for expenses such as loan application fees, stamp duty, solicitor fees, property insurance, land tax/strata fees, council rates, etc.
To get the ball rolling in the right direction, a good idea is to apply for home loan pre-approval. This provides you with a clear picture on the property price range suited to your circumstances. During this process you can also gain a thorough understanding of the type of home loan that best suits your needs.
When applying for home loan pre-approval there are many contributing factors that need to be considered. The maximum amount you can borrow will vary from lender to lender, based on your income, financial commitments and the type of loan applied for. Lenders will also take into consideration other aspects such as savings, assets, debts, credit history, employment history and stability residence.
So, it pays to shop around for a loan and lender suited to your needs and circumstances. Check out a number of different lenders and loan products – there is a wide range out there, from major banks through to smaller banks, non-bank lenders, credit unions and building societies.
Some first homebuyers looking to enter the market sooner rather later may consider purchasing property with others such as family or friends. If you are considering this, be sure to seek legal/financial advice so each party is aware of their rights and responsibilities and consider putting in place a formal agreement. I suggest that all parties meet regularly to discuss the repayment progress and future plans for the property.
Loan guarantors are another option for first homebuyers. Having a guarantor may allow borrowers who have insufficient deposit funds but have the ability to make the required loan repayments, to secure additional funds to purchase a home.
Another option is to lower your expectations the first time round and buy within an area that is not necessarily your ‘ideal’ location, until you can afford otherwise. As long as a property has everything you need, and not necessarily everything you want, you will still be on the right track. Remember, your first home is often the starting block for bigger and better things.
Purchasing property is an exciting time, however it requires careful consideration of a range of aspects and detailed planning before you even commence the property hunt, let alone think about applying for a home loan.
If the thought of paying your own mortgage instead of your landlord’s is appealing, then save hard, get professional assistance, make the commitment and stick to it!
For more information ring Richard Windeyer on 1800 01 LOAN