Tired of renting or want to finally enter the real estate markert? Here are some of my tips that guide my clients to property ownership:
● Stay home as long as you can! Not everyone will have this luxury but living at home rent free or paying board is a lot cheaper than paying rent. The minute you leave you’ll most likely pay for your own food, come across other bills and fall into a trap of not being able to save money.
● People believe entering personal debt (for example a car loan or credit card) can increase your chances of obtaining a Home Loan. This is a misconception. Not only does this rarely benefit an applicant, it also reduces the amount someone can borrow and how much money someone can save per pay.
● Try to get your financial affairs in order before thinking of starting a family. Having children increases your living costs which reduces your borrowing power. I speak to a lot of families who’d like to buy a home for their family but struggle to do so as they are generally only supported by one wage which needs to be shared between two adults and children. The weird thing is, if you have already have a mortgage and you decide to have children, a bank isn’t going to take the house off you. Just make sure you budget correctly and you repay your mortgage on time.
● Don’t just look at brand new properties to take advantage of Stamp Duty concessions and the First Home Owners’ Grant. In most cases you pay a premium price for a brand new property which outweighs the savings you incur when using the grant. The scheme actually benefits the government by expanding state development as opposed to a first-home buyer. It also benefits the developer as they increase prices knowing that they’re properties look attractive to first-home buyers.
● You don’t always need a 20 per cent deposit. A lot of banks will accept a 5 per cent deposit as long as you have money to cover stamp duty and other government fees. Additional loan costs will apply using this method, it could be an extra $20,000 in ‘Lenders Mortgage Insurance’ (you can generally borrow the majority of it). But if you wait to save a 20 per cent deposit, house prices might have increased twice as much as you’ve save and you’re back to square one again. Weigh up an extra $20,000 as opposed to $50,000 in property growth.
● Finally, set yourself goals and write them down! I can’t stress the importance of this tip. Whether it be saving $20,000 in 2016, achieving a promotion at work or entering the real estate market. It’s how my clients achieve their dreams of property ownership and it will help you as well, even if you’re not looking at buying a place to live in.