Here are 6 handy tips to help the difficult process of buying your first home
Over the last century, owning your own home has become as Aussie as kangaroos, having our prime ministers sink beers in public and chowing down a Bunnings sausage.
And although many things have changed between our generation and our parents’ generation (think influencers, side hustles and a national obsession with avo smash), the desire to own a home still rings true.
And for good reason.
Property ownership can be a VERY effective way to generate wealth. In fact, over the last 25 years, the average Australian house increased in value by 6.8% each year.
So if home ownership is a financial goal for you — these are 6 nuggets to help you get there in 2021.
Before you can even start looking at homes, you need to find out how much you will be able to borrow.
Just like you look up your Tinder match on Instagram, lenders will do their due diligence on you. They look at your income, your expenses (yep, your UberEats and online shopping will be on show) and any other debts you have.
Once a lender has a ‘snapshot’ of your finances, they’ll provide you with your ‘borrowing power’ (a sexy way to say how much you can afford to borrow).
Now you know how much you could borrow from a lender — but to access those funds, you need to scrape together enough money for a ‘deposit’.
A home loan deposit is your initial contribution to the purchase price of a property. The good news is that it means you own a small portion of the home upfront. The trickier part is that many lenders require a deposit of 20% of the property purchase price.
FYI: Check out the First Home Saver Super Scheme, it allows you to save money for your first home inside your super fund and receive tax benefits!
Breaking into the property market is harder than sitting through a full episode of Home & Away. That’s why each state has their own First Home Owners Grant. If you can access the grant, it’s basically free money towards your dream home.
Your credit score is like your Uber rating for money. Checking your credit report before applying for a home loan will help you check that you’ve got a clean bill of (financial) health for lenders. And most importantly, you can check that nobody is livin’ their best life with a fraudulent credit card in your name (trust us, it happens).
Did you know 50% of Aussies are still with their first bank? We get it, it’s a pain to shop around but being ‘loyal’ means that your bank doesn’t need to offer you its most competitive interest rates to keep you happy. You could end up paying thousands of dollars in interest over the life of your loan.
With interest rates at an all time low, there are some great offers on the market from banks and other lenders, too. Take a look at Athena’s variable home loan, UBank’s variable UHomeLoan and Loans.com.au’s Smart home loan.
When you find a home loan provider that ticks the boxes for you, get your loan pre-approved. A pre-approval is a lender’s commitment, in principle, to lend you an amount of money before you bid for a house (and helps you tackle your property hunt with greater confidence).
If we have one piece of advice, it’s to set expectations before you start your house hunt. Finding your perfect home takes time. And for good reason — it’s bound to be one of the biggest financial decisions of your life.
Do your research, get to as many inspections as you can, strap yourself in for the possibility of disappointment and ultimately, a brand spankin new house. Go get ‘em tiger. The property world is your oyster!
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