In making your first purchase in property, whether it be your first home or first investment property, it does not need to be daunting. With a little preparation the journey can be fun and you may even find that you want to stay on the ride.
Let's get started - First Home Buyer
Get an idea on how much you want to spend on your first home. In order to do this have a look at real estate websites like domain.com.au and realestate.com.au. This will give you a feel for what you might get for your dollar. For example, if you are after a 3 bedroom house with double garage in Charlestown, do your research on the above sites and see what this style of house is generally selling for.
Keep an open mind, you may have to go to an outer suburb if the prices are too high for what you want.
Talk to your local broker for hints and tips on how to be in a position to borrow the money for that house.
Save, save and save some more. Work on a savings plan. Have a clear, written budget which includes all your spending. Your broker can assist or you can find budget templates online.
Look at what your current surplus income is and set aside as much as you can for your deposit.
In saving for a deposit you are doing two things, one - you are saving the actual deposit that you require and two – as a regular savings pattern you are proving to the bank that you will be able to afford the loan. So it makes sense that the amount you save should be equal to the amount the payment would be. If you are renting you save the difference of the rent to the repayment.
This could be a 6 to 12month plan depending on your financials.
If Mum and dad want to give you some cash to help you with your first home, for the bank to consider this as your savings it would need to be in your account for ate least 3 months.
If you find that your surplus income is not enough to cover a loan repayment you may have to adjust your budget/living style or increase your income. Remember when you start your mortgage there will be a regular set repayment for fortnight or month. The bank want to be sure that you can make regular repayments which is why the savings plan is very important.
Please Note: The bank determines Genuine savings to be money is saved up over a 3 month period or funds held in your account for ate least 3 months. Please note it is possible to borrow 100% of the purchase price using equity in Mum and Dad's property however the bank still need to see that you have the ability to make the repayments.
Once you get close to reaching your deposit amount it is time to approach your broker again to start the application process. Before you find a house you want, meet with your broker to make sure you fit the banks guidelines before you get your heart set on the property.
The best strategies are the ones that keep it simple. Following a few easy steps and being prepared can make your first property purchase an enjoyable one. Good luck with the house hunting!
Wade Hooper is a qualified Mortgage Broker and owner of Inspire Property and Finance.