IF you’re looking to put your flatting days behind you, buying a home as a young couple is an exciting prospect.
However, there are several factors to keep in mind when you decide it’s time to buy. From coming up with a deposit to choosing the right area, the buying process can seem complicated at the best of times.
Fortunately, with some careful planning and a sense of reality about what you can afford, you’ll be in a much better position to make an offer on that perfect property.
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Save, save, save
Whether you want to buy a home in six months or three years time, you’ll first need to come up with a significant deposit.
Depending on the city or town you choose to buy in and the kind of property you’re after, the deposit you need could vary greatly. For this reason, you’ll first need to research average house prices in your desired area so you know what figure you’re working towards.
Your loan to value ratio (LVR) is a figure that’s calculated by dividing the amount you’re borrowing by the value of the property you want to buy, notes the Australian Securities and Investment Commission. You’ll have to borrow whatever your deposit doesn’t cover.
You should aim for a low LVR – ideally less than 80 per cent. Otherwise, you’ll likely need Lenders’ Mortgage Insurance, which protects the lender if you default. This is an extra cost that will be added to your loan repayments, so work on coming up with a deposit of 20 per cent or more to avoid this.
If you’re planning on starting a family in the future, you should consider whether the home you’re buying now will accommodate a family in the future.
Consider the number of bedrooms and bathrooms as well as outdoor space. You’ll also need to investigate what schools are available in the area. Thinking ahead can eliminate the need to sell a home that you’ve come to love because it’s become unsuitable for your needs.
Think about your credit rating
If you are currently renting a property, be careful of late payment of rent, financial institutions are asking for tenant ledgers more now than in previous years, they use this information to assess ability to pay and consistency.
If you cannot pay your rent, make sure you call your agent and have the reason recorded on file as any notices for breaches of the agreement will be recorded, The RTA legislation states your rent is payable on or before the day the rent is due so make sure you have allowed ample time for bank transfers of the money to ensure the rent is paid before the due date.
Pay down all your credit cards and store cards as quickly as possible, this gives you a buffer if you need to have access to emergency funds at any time.