For many people, buying your first home - or your next home - can be tough. Really tough. Sydney prices continue to rise and just when you thought you had enough saved up ... it is no longer enough.
It's exciting to look through internet photos of gorgeous homes, dreaming of where you;d put your things, how you'd feel to live there and so on ... and then reality hits.
Saving up for a deposit can be difficult - saving for anything can be a challenge. The trick is:
- Work out what you can comfortably go without
- Use less of the things you can use less
- Increase income where possible: take a casual job, even just a few hours on the weekend.
- Set a budget - and stick to it.
- work with a buffer for unanticipated expenses - but hold yourself accountable with this buffer. Movies and dinner every week are not buffer expense items. Buffer expense items are things like: the computer died and needs to be replaced; a period of illness that increases your medical expenses.
Getting a loan
Usually, lenders will require evidence of regular income and savings from the past 3-6 months (if employed) or up to two years (if self-employed). Keeping that information handy is really helpful.
If you're self-employed, perhaps in a new business, and you know it'll be a couple of years before you're able to get a loan, use that time to reduce your expenses to the bare minimum and boost your income wherever possible. Reduce your credit card limits.
The government offers the First Home Owner Grant for people who are purchasing their very first home. Eligibility criteria apply though.
Use an experienced mortgage broker
An experienced mortgage broker knows how to get you the very best loan and loan structure for your needs. It's not all about the interest rate; the structure of the loan is just as important, and also be sure to check the comparison rate. It often tells a very different story!
Once you have a deposit saved - or are close, seek pre-approval for a loan
Meet with a mortgage broker and be honest about your situation. Submit all of the required documents as soon as you are able, and with any luck, you'll have pre-approval within 1-5 days.
Pre-approval and a deposit in place
The next step is to engage a buyer's agent to locate the best property for your needs, and negotiate the purchase price down where possible. Your first home sets you up financially for life. It's important that the home be one that is likely to appreciate in value and continue to meet your needs. A buyer's agent can sort the best properties from the not-so-good properties, ensuring that your hard-earned deposit and mortgage repayments are working to assist your longer-term finances.