For most of us, our lifestyle choices are directly related to our financial situation. You might be fortunate enough to have inherited some wealth or perhaps have been working and squirrelling away savings since entering the workforce. However, if you’re new to the whole world of finance, it can be daunting and difficult to know where to start. If you are dreaming of property ownership but think it’s not possible, before you give up on the idea do a proper survey of your financial situation. The Australian property market is currently cooling which means more leverage for buyers and higher rates of private sales over auctions.
Read below for some tips to get you started and to help keep your stress levels low.
Do Some Figures
Before a bank tells you how much they will ‘give’ you, it’s up to you to work out how much you want to spend on a house. This means figuring out how much per month you can realistically devote to mortgage repayments. Could you afford more when rates rise for instance? Begin by doing a budget of your expenses for the last year. Not exactly a thrilling exercise, but necessary so you know how much cash you have to put towards a mortgage. Due to tightened lending laws, this will need to be pretty accurate, and you may even need to provide proof that your living costs are sustainable in your situation. Best place to start: pay off and close those credit card accounts! Remember knowledge is power and power is control. The more knowledgeable you are of your financial situation the more in control you will feel and that will help keep you calm.
Chat To Some Lenders
If you have the time, it really is best to speak to lenders face to face. Website comparison sites can be useful, but don’t forget they ultimately receive a kickback from whichever lender you select, so they are not a neutral comparison. Many people favour major banks, but don’t forget that credit unions and even online lenders can offer competitive rates, often without the bells and whistles of things such as offset accounts.
Hot tip: Don’t automatically seek a house at the maximum mortgage you can obtain, see what your money gets you in a few price brackets and locations and learn to love the good old open house inspection to get a feel for properties in person.
Australian politics may currently remind you of a farce, but there are government initiates that really boost your buying power. For example, there’s a first home owners grant in Vic that can give you up to 20k if you buy a home in regional Victoria, or 10k for other areas. More recently, there are stamp duty reductions for first home buyers on properties up to the value of 600k. This can save you some serious cash. Check in with authorities like the State Revenue office website to see eligibility details. There are also good concessions for off-the-plan properties or building packages which increase your chances of receiving the above duty exemptions. This is when the construction or refurbishment cost is deducted from the contract price of your home, which reduces the dutiable value of your residence.
Buying a new home, especially your first, is never easy and it is racked with questions and doubts. This is an exciting time and should be filled with joy and celebration, not worry or stress about the finances. There are people out there that can help you so never be afraid to ask or seek help if you need it.