6 things to get ready if you want to buy your first home
But what do 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 done it heaps before. We reckon 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:
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 know if you need to cut back somewhere and the lenders are going to ask you as well.
Affordability. So what can you afford? Actually this a super important question. There are a heap of calculators online 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 and starts to 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.
Deposit. You need a deposit! With such a big purchase, you need to have some funds to put towards it, because you need to own a piece of this house from the beginning - the banks aren’t going to give you the whole amount! So start saving. Every bit every month will help!
Practice repaying your loan. A way you can build your deposit, is by paying a regular amount each pay cycle into your savings account. This could be an extra amount on top of your rent that you would need for a future loan repayment. Doing this gets you into the habit of making a payment each month (or fortnight) as if it was your home loan. You can still set aside additional lump sums each month, but a regular direct debit from your account into your savings account is great practice and also shows your future bank that you are ready for a loan.
Other loans - are they necessary? Credit cards, personal loans, AfterPay - are they all necessary? Do you really need them? 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 all of the limit that you have, 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.
Credit Check. We’re all good, right? We always pay our bills on time, even when we 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 because it didn’t reach you when you moved house 8 years ago. There are some free online checks (but you can get spam) or some really cheap options. Definitely worthwhile when getting yourself ready.
So there you have it - our top 6 tips for getting yourself ready if you want to buy your first home.