First home buyers are on an exciting journey, building a solid platform for the future. But — like with any other journey — there are plenty of twists, turns and decisions to be made along the way.
Let’s take a look at some of these decisions as we examine how to buy your first home in the right way.
Forever Home or Stepping Stone?
The tip here is simple — talk to your partner and decide what you want. It’s unlikely that your first home will be the property you spend the rest of your life in, but you will be there for a few years, so make this decision carefully.
How to Make the Right Decision
- Outline your priorities for the home purchase — where you want to live, what facilities you need nearby, what the house must have, etc.
- Decide how much money you want to spend on the property after the purchase, on an ongoing basis.
- Decide if you are looking for something that can be quickly fixed up or is more of a long-term project.
- Think about where you and your family hope to be in the next five years and build your property plan around this.
Strike Now or Build that Deposit
Do you have enough money saved up to put down a deposit? If so, should you make your purchase now, or should you wait for that deposit to grow further over time? You need to have an objective in mind when you make a property purchase, and this objective should guide you on your way. Don’t be tempted to stray from your plan.
How to Make the Right Decision
- Make your objectives clear from the outset and build towards these.
- Understand exactly how much you can afford to put down.
- Research the market to discover what you can afford with this level of deposit.
- Understand growth in property values — prices might grow faster than your deposit savings fund.
Buy Conservatively or Maximise Buying Potential
Do you want to go all-out and purchase the most expensive property you can afford, or would you prefer to have something left over? Remember, you may be able to accelerate the appreciation of your house by renovating and installing new features, but you’ll need additional money to fund this.
How to Make the Right Decision
- Make an accurate budget for how much you can afford each month and factor this into your plan.
- Understand all of the different costs and fees that go into the purchase so that there are no nasty surprises.
- Would you be happy in a home that is cheaper than you could potentially afford? More cost-effective houses can still provide everything you and your family need.
Consider how the property will increase in value in the future. This could just be the first rung on the ladder of your property journey.
Fixed – Rate or Variable Rate Mortgage
With a fixed-rate mortgage, your interest rate is locked in and will not change. With a variable rate loan, the interest rate will track up and down according to market movements. So, which one is the best for you? This will largely depend on current mortgage interest rates as well as predicted future movements and the length of the loan term.
How to Make the Right Decision
- Consult with the experts to gain an understanding of the expected interest rate movements.
- Be realistic about the way interest rates are going — for example, even if you have heard predictions of a rate decrease, this does not mean it will necessarily be the case.
- Consider protecting yourself with a fixed-rate mortgage, taking advantage of potential low rates.
- Consider using pre-approvals to lock in a specific rate ahead of your purchase, giving you more flexibility when you buy.
Find the Right First Home Buyer or Investment Property Loan for you
Here at Sydney Brokers, we are proud to be able to help our clients find the right mortgage or property loan for their needs. Whether you need a loan to fund a property investment or are a first home buyer, we can deliver the option you require. Reach out to our team to get started and connect with financing products that will help you secure the perfect property.
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