6 things to get ready if you want to buy your first home

When you’re renting, it is easy to calculate how much money you are giving your landlord. And isn’t it frustrating - that money is paying off someone else's mortgage. Then you realise with that money, you probably could be paying off your own home loan instead!

But are you ready to buy your own home? What should you do first? Do you start looking for properties or do you check your numbers and start to get yourself ready? It’s just hard to know where to start.

Well, lucky for you, we’ve helped many many peeps like before. And we believe that the best place to start is with you. So here’s our guide off the top 6 things to get ready if you want to buy your first home:

1. Expenses / Budget.
   Yep, a budget. Sorry but we’re going to start with the hardest one first.

   You need to know what you’re spending each month. Not a rough guess, but a pretty accurate one. You don’t want to over commit yourself by buying a bigger home than you can actually afford. Nor do you want to have to give up going to the gym or your morning coffee.

   So do a tight budget of what you spend each month and even break it down into what you definitely must spend and what is discretionary. It will help you to see if you need to cut back somewhere. Plus, the lenders may also ask you that. Going through your bank statements, to see what you've actually been spending recently, will help make it better than a guess.
   

2. Affordability.
   So what can you afford?

   Actually this a super important question. There are heaps of calculators online (including HoLo’s) that can give you an idea of how much you can afford based on your income and expenses, as well as what your repayments could be. This is where your budget helps; it can give you an idea of what you’ll be repaying each month (instead of your rent) and what size loan you can afford. You can play around with different options until you find your comfort zone.
   

3. Deposit.
   Yep, you will need a deposit.

   With such a big purchase, you need to have some funds to put towards it because you need to own a share of this house from the beginning. The banks aren’t going to give you the whole amount (100% mortgages are ancient history now), so start saving. Even a little each week will help.
   

4. Practice repaying your loan. 
   This is totally our favourite tip! Once you know what sort of repayment you think you can afford, or are comfortable paying, start practicing by actually doing so.

   Pay a regular set amount each pay cycle into your savings account that, when combines after your rent payment amount, is equal to the loan repayment you will be paying.

   For example, if you aim to repay $1,200 each fortnight and your rent is $700, then place the additional $500 in a savings account. Setting up an automatic transfer from your main account makes doing this easier. It will get you into the habit of making the correct payment each pay cycle, just as if iyou were paying the home loan already. It also helps show you (and the bank) that you've got this!

   You can still set aside additional lump sums each month, but a regular direct debit from your everyday account into your savings account is great practice; and - most importantly - don't touch it! 
   

5. Other loans - are they necessary?
   Credit cards, personal loans, Buy-Now-Pay-Later - are they all necessary? Do you really need them now? They may have got you the car, that awesome holiday or that great new outfit, but they can impact your cash flow as well as your borrowing potential with a lender.

   If you don’t need them, or never use them to their credit limits, take a few minutes to close them, repay them or reduce the limit to what you actually need. They often have really high interest rates and are probably costing you more than your realise.
   

6. Credit Check.
   You’re all good, right? You always pay your bills on time, even when you were in that share house after uni…..or, maybe not. Sometimes there might be something on your file that you totally forgot about, or worse still, weren’t even aware of. So it’s best to check this early, in case there is something and you have time to fix it. The last thing you want is to have a loan application stopped because you didn’t pay a phone bill that didn’t reach you when you moved house 8 years ago!

   You can access your credit report for free online these days (most credit report agencies allow one free report per year) or there are some very affordable options to get them more regularly. It’s definitely worth downloading the full report - not just your Credit Score.
   

So there you have it - HoLo’s top 6 tips for getting yourself ready if you want to buy your first home.

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