May 29, 2018

Our Insights

Buying a new home is almost always a challenge, but it’s doable even if you’re young or have no history of property ownership.

The key here is good preparation.

Here's our tips to help you successfully break into the market on your first try.

Save Up for Your Deposit and Other Purchase Costs

You can’t just waltz into a bank and get a loan with nothing to your name. It helps to be debt-free and have good credit, as we’ll discuss later, but those things in themselves aren’t always enough.

Rather, you should be prepared to foot certain costs yourself. This includes a minimum of 5% of the purchase price which will be the deposit. If you can save up more towards the deposit, that’s even better.

Besides the deposit, you should also be prepared for other costs including stamp duty, title transfers, registration, Lenders Mortgage Insurance and other fees. 

The saving process can be intimidating, so here are a few tips to help you save up for your deposit: 

  • Commit a specific amount to savings with each paycheck and deposit that amount immediately after you’re paid. Don’t wait until month’s end, saving only the stray pennies you have left over.
  • Besides what you set aside at the start of each week or month, look for additional ways to save throughout the month on your daily living expenses.
  • Shop for cheaper brands of the products, clothes and food that you normally buy.
  • Avoid complete self-denial. If you’re miserable, you’ll be more likely to break your savings resolve. Strive for balance. Minimise your spending only to the point where you’re living comfortably and still setting something aside for the future. This will help you stay happy while moving towards your goal.

Get some financial advice before you begin to help you figure out how much you need to budget and save to make that initial deposit on the property you purchase. 

Stick with the Same Job 

Lenders want to see that you have a history of steady income. Stay with your job until well after purchasing and even after moving in. This will show that you’re committed to making repayments on your mortgage.

What if you’re self-employed?

Be prepared to show at least two years’ worth of tax returns. These will demonstrate that you are financially responsible and can afford to may loan repayments while paying your due taxes.

Whip Your Credit into Shape

Your credit and debt history will largely determine what your loan options are.

Spend a little time getting familiar with your credit score and getting rid of bad debt. A lender will closely examine your credit history, so you’ll want to know what it looks like, first. 

Pay Off Your Debts

The next step is to pay off as much outstanding debt as you realistically can. The less you already owe, the easier it will be to borrow funds for your first property. It’s as simple as that.

It’s also generally wise to lower your living expenses so that you can continue eliminating debts while saving up quickly toward that deposit. 

Settle for Less

It’s absolutely okay to settle for less than your dreams when it comes to the property market!

You probably don’t have the means to buy your dream house right off the bat. But you can get started in the market by purchasing a property that comfortably fits your budget.

This will help you gain needed experience and build your portfolio. When you find a property you love later on, you’ll be in a better position to go for it. So keep your options open and your expectations realistic as you shop and you won’t be easily discouraged.

Shop around

Are lenders are not equal. One bank might offer a great deal, another may not. One bank may knock you back, while another may be keen for your business. There are hundreds of loan products on offer so it is best to work with an experienced mortgage broker, who will not charge you any out of pocket expenses for their service. 

Need help?

Calder provides you with two great services. First, get advice about your financial situation with Calder Wealth Management. Second, Calder Finance Broking will help you get the best possible deal. 

Get in touch for a discussion about your situation.

Written and Supplied by Cliff O’Connell of Calder Finance Broking, for more information please visit the Calder Finance website. Please note that Calder Finance Broking Pty Ltd is a Corporate Credit Representative of BLSSA Pty Ltd ABN 69 117 651 760 ACL 391237.

 

Contact the team of expert financial advisers at Calder Wealth Management.