Are you ready to buy your first home? Here are some telltale signs.
You’ve saved the deposit
Property is a big purchase, so you’ll probably require a loan from a bank, financial institution or mortgage broker. In return, they will require a cash deposit of around 15–20 per cent of the value of the property.
You will also need funds to pay additional expenses such as solicitor fees, home loan establishment fees and settlement costs. These expenses range somewhere between two and seven per cent of the value of the property.
You know what you can afford
Your monthly mortgage repayments should be less than or equal to 25–30 per cent of your gross monthly income. You’re in an even better position if all your outgoings, including mortgage, credit card bills, car payments and living expenses do not exceed 30 per cent of your income.
An online calculator will give you an idea of what you can borrow (to be used as a guide only).
You know the market
Research is vital when you’re planning to buy a property. Get familiar with the market you are buying into and pay attention to sale prices rather than the asking price, because these can be quite different. In addition, ask your real estate agent or advisor for an update on the current state of the market. Are there more properties currently on the market than buyers, or are buyers competing for properties?
You have a good credit rating
When you apply for a home loan, your mortgage provider will look at your credit history to determine your eligibility or any risks associated with lending you money. Your credit history will show previous loans you have applied for, whether you’ve paid these loans out, your current debt, the number of bank accounts you have open, and so on.
If you haven’t already done so, check your file before you apply for a loan. This will give you time to check the accuracy of the report and correct any errors it may contain.
You understand the commitment
Buying a property means ongoing commitment and expenses. Before you commit, make sure you understand the ongoing expenses such as insurance, council rates, water rates, owners’ corporation levies and general maintenance.
If you have indicated ‘yes’ to all of the above, you are definitely ready to buy.
The next step is to obtain a pre-approval for your home loan, so that when you do find the right property, you can make an offer straight away.
Have you outgrown your home? Or has your home outgrown you and your household? Fewer and fewer families expect to stay in their first or second home for the long haul. Here are some factors to determine if you're financially and emotionally ready to sell your house:
Growing or shrinking household -- Are you about to welcome a new baby or take in aging parents? Maybe you're sending your youngest off to college. In any event, if your living space has become too cramped or grown beyond your needs, it may be time to make a move.
Plenty of home equity -- Subtract the value of your home from the amount you have left on your loan. What's left over is the equity -- or the amount you'll have post-sale. After you sell your home, you'll be a buyer again, so having some funds to put down is key.
Interest from potential buyers -- You'll want to list when you know buyers are looking. Some experts say late spring is the ideal time to sell, but peak seasons vary by region. Milder weather can increase buyer interest, but that also means more competition from other sellers.
Changing circumstances -- Location matters. Whether your neighborhood dynamics are changing, you're unhappy with the schools in your area or a new job significantly increases your commute, your community needs to fit your lifestyle.
Home improvements -- Renovations may be a wise investment, but it's best to avoid listing your home in the middle of a project. If you plan to sell your home as is, completing some minor home updates such as new paint and fixtures can be a huge selling point.
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