For first time buyers, the prospect of entering the property market can be a daunting one. But with interest rates at an all-time low, plus a new government-funded first home loan scheme due to launch in January 2020, opportunities are on the rise. Follow these steps for your best chance of success – that is, popping the champagne post-auction.
Get serious about saving
Following Australia’s Royal Commission into financial services, “responsible lending” is a new buzz phrase and dictates that a bank loan must be suitable (i.e. repayable) for a borrower. The upshot? While you might find an institution that will loan up to 95 per cent of a home’s purchase price, it’s much safer to come armed with a 20 per cent deposit. With that in mind, you’ll want to draw up a comprehensive budget to reach your fiscal goals. There are numerous useful apps for money monitoring, while online loan calculators will also come in handy. Don’t forget to take into account the extra costs of home ownership – stamp duty, loan application fees and mortgage insurance, to name a few – plus any government grants you might be eligible for.
Clean up your finances
“Many first-time homebuyers have been in the rental market and don’t realise their rental history can support their ability to service a loan,” says Michelle Delaney, CEO of Better Homes and Gardens Real Estate in Australia. “Ensuring that your rental payment record is clean and consistent is key; always ask for a rental payment ledger from your current real estate agency.” While you’re at it, get your credit history in order. Lenders usually want to see three-to-six months’ worth of bank statements before they’ll do a deal.
Build your dream team
Purchasing a pile of bricks needn’t be a lonely pursuit – in fact, a skilled support network can make a world of difference. “Surrounding yourself with the right people will help you make the right choice,” affirms Delaney, who suggests enlisting the expertise of a qualified financial advisor and a broker you can trust. “Also choose a real estate agent who’s accomplished in your area,” she adds. “The right loan and property will afford you the lifestyle you seek.”
Don’t get too emotional
It’s best to approach real estate with a healthy balance of heart and head. “Emotions when buying property can blur your perception,” explains Delaney. “Don’t get caught up in what you want versus what you can really afford. This is your first home so keep things in perspective.” And be realistic: you’ll probably endure a few heartbreaks before you find The One, so try not to start mentally decorating that Art Deco apartment or planning Christmas in the seaside semi before it’s actually yours.
Forget about timing
“There is never a right time in the world of real estate,” declares Delaney. “I’ve seen people wait for the market to drop – and they’re still waiting!” The time to buy is when it’s right for you – financially, mentally and emotionally. Also keep in mind that there are ways to break into the market before you can afford your dream home; “rentvesting” means buying an investment property then renting where you want to live. It offers the benefits of home ownership (and a tax deduction!), without having to sacrifice your lifestyle.
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