Getting a foot on the property ladder
Trying to get into the property game? Recent reports about the market may have put a downer on your plans.
It’s not all doom and gloom though. Whether you’re looking to buy your first home or invest in a second, there are ways to get your foot on the ladder.
1. Be realistic
Your first home may not be your dream home – that’s the bittersweet truth of purchasing property. But it also doesn’t have to be your forever home. Figure out what your needs will be in the next five to seven years, and then buy for that. You may need to make sacrifices to do so, like looking further out of the city to find a bigger property.
“Rent-vesting” is also a popular option to retain some financial stability after purchasing a property. Invest somewhere that may not be your first choice to live and rent it out, so over time you may be able to afford to live where you want to live. If you’re a first home buyer, remember that you may not be able to get a grant if you don’t intend on living in your property.
2. Rethink buying with someone else
…specifically, a friend or family member. Pooling your money to get enough for a deposit may seem like an easy hack, but it means you must share legal and financial control over your property with someone else.
Side step this by thinking outside your current box. Research other property markets that may not be booming but which you can afford on your own, because chances are those markets will bounce back soon enough.
3. Research or regret it
It’s not enough to simply buy in an area or city because it’s experiencing a boom. Educate yourself to maximise your dollar. You’ll need to determine what a bank is willing to lend you before you start shopping. Find out which loans offer the most competitive rates, how much of a deposit they need and property values in the areas you’re interested in, because the figures you’re looking at now won’t necessarily be the same in even six months’ time.
It’s also important to weigh up what you want versus what may be critical for resale. Perhaps you want an apartment and aren’t fussed about a car space because you bike to work – but that parking spot may just make all the difference when it comes time to sell.
Instant gratification will get you nowhere in the property market, so manage your expectations and start thinking long-term.
Start with why you’re buying – is it to live in the property or is it an investment? If you’re investing, is it for long-term gain or a quick buck now? Don’t rush into a purchase because you’re worried about a rise in house prices. If you can save, say, $300 a week in your current residence, this adds up to about $15,000 in one year. Deciding to stay put for the extra year or two adds up and can help with securing lower interest rates on your loan in future.
5. Pay your debts
This one we can’t stress enough. Being saddled with debt is not an ideal way to save for a home. Whether it’s personal loans or Afterpay, paying off as much as you can will put you in a better position when you apply for a loan.
You won’t save a deposit by accident. Start working out a budget too, so you have a regular savings plan. Take a hard look at your finances and adjust where you need to so you understand how much you can save every week.READ MORE
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