Finally, Spring is here! No doubt you have been counting down the days just like I have.
With Spring comes a lot more opportunities to purchase your first home or to upgrade your existing home as more houses start to come on the market.
Below I have provided a list of things you should be doing, if not already, in preparation for buying your first home.
Save, save, save
If you haven’t already started saving for your first home, then start NOW. I would aim to save at least 5% of the purchase price. For example, if you believe $500,000 will buy you something nice for your first home aim to have a minimum of $25,000. More if you can as there are always other costs to consider once you’ve purchased your house such as removalists and new furniture.
Cut back on your spending
As part of the review when assessing your borrowing capacity it is my responsibility to understand what your monthly living expenses are, and to do this I get you to complete a form that outlines items such as groceries, clothing & personal care, medical & health costs, connections, recreation & entertainment and transport. I then check the amounts you have listed against your everyday transactional account and credit card account (if that’s where you make some or all of your purchases from).
More often than not the amounts listed by my clients do not match up with what they are actually spending so I would recommend that you undertake this exercise now to understand what your monthly spending habits are and identify areas that you can cut back.
It is a requirement that I review a minimum of 3 months of transaction statements so the sooner you start to tidy up and cut back on your spending the better.
Get rid of existing liabilities if you can
When assessing your borrowing capacity, I will need to understand what existing debt you have such as credit cards, personal loans, HELP debt and even Afterpay (& similar schemes). The less you have of these the better your borrowing capacity will be, so if you don’t need your credit card or you have been using Afterpay, now is a good time to pay them off and close them down.
Getting a home loan is not something you can get overnight as there is quite a bit involved before you even submit your application. Don’t leave getting a home loan to the last minute and be disappointed when you miss out on that dream home. I always advise my first home buyers to see me at least 6 months out so I can help them put a plan into place so that they are well and truly armed and ready when the time comes to purchase their first home.
How do you know what your money will really buy you? Have you been looking online, or have you actually been attending open homes? It is a good idea to start doing research even if you are still 6 to 12 months away from buying your first home because you will get a good understanding of the area you’re thinking of buying in, what your money will really buy you and get you familiar with the whole process as it can be quite daunting.
Buying your first home is not impossible with the right guidance and the right plan. Call Nikki at Cherry Lending & Finance to find out what you need to do to purchase your first home.