Trying to get a foothold on the property ladder? Here are a few tips to help bring your home ownership goal closer to reality.
1. Understand your borrowing capacity
Talking to a lender at an early stage, even if you’re not ready to buy, will give you an idea of your borrowing capacity – in other words, how much you can afford to borrow for your particular circumstances. This is important as it helps you narrow down the suburbs you can afford to buy in.
2. Be organised about saving for a deposit
The more you can save as a deposit, the less you need to borrow and the lower your regular repayments may be. So it’s worth building up your deposit, even if it means giving up some luxuries for a while.
Instead of trying to save what’s left over after you’ve paid bills and expenses, aim to save a fixed sum each pay day. Think about setting up a regular transfer from your everyday account to a high interest savings account. You’ll be growing savings and developing the habit of living within a set spending limit – something that can be useful practice for learning to live with a home loan.
3. Get your finances in the best shape possible
Use the time it takes to grow a deposit to improve your overall financial health. Lenders don’t just look at your income when deciding loan eligibility, your disposable income will also be taken into account and this can be impacted by repayments on other debts. Where possible pay down personal loans and credit cards, and ensure you pay bills on time to avoid any black marks on your credit record.
4. Think outside the square
If you can’t currently afford to buy a place on your own in your preferred area, it could be worth looking at other options. For example, you may consider pooling your cash with a close friend or sibling to purchase property as co-buyers, making your first property a rental investment in an up and coming area, rather than an owner occupied home, or buying off the plan to take advantage of possible stamp duty savings.
If you’re not sure, consider asking a financial adviser for tailored advice for your circumstances.
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