The sense of achievement that comes with investing in your own place while building equity can be quite exhilarating. While the topic and conversation around buying your first home could be an emotional one, it’s best to ensure that you stay rational and focused through the purchase process. Here are some easy ways to prepare yourself for your first home buying journey.
Identify your budget
A lot of first-time homeowners mistake their maximum borrowing capacity for their property purchase budget. Your maximum borrowing capacity usually just considers basic living expenses and allocates a large chunk of your salary to repayment. This could be a very demanding financial arrangement you may struggle to keep up with. You need to realistically understand the lifestyle changes you are capable of and comfortable with making once a substantial proportion of your salary gets deducted for your mortgage. Additionally, maintaining your own home costs a little more than residing in rented accommodation. So, do account for these expenses as well while budgeting.
Be sure of the location
Selecting the location of your home can be a long process by itself. You could typically look at areas that address personal requirements like commute time to work, neighbourhood amenities and connectivity. In addition to this, you should also consider key aspects that affect the purchase from an investment point of view. For instance, if you are looking at locations that have already hit their peak value with little room for improvement, you may not see good returns on your investment as opposed to an area that is undervalued and is likely to appreciate more. The proximity of your home to noisy highways or institutions like schools could also adversely impact its future price. On the other hand, a property located in a quiet residential area or has a water body view will command a premium price. Finally, the size of the house versus the lot size is another factor you should certainly consider. There are a lot of cases where an older house standing on a large lot is priced similarly to a newer home on a far smaller lot. From an investment point of view, the older house on a large lot is a better investment as the physical structure is a depreciating asset while the land is an appreciating one.
Be thorough with property inspection
Invest in inspecting the property well. If required hire a professional. Make sure that you are aware of key property aspects like main structure health, state of water pressure, plumbing, appliances, adequate sewage arrangements, pests, mould, central air-conditioning and finally appropriate council approvals for any extensions to the property.
Keep emotions at bay
Don’t let emotions get the better of your property hunt. Negotiate well once you’ve zeroed in on the place. Don’t let your strong like for property get in the way of paying the right price. It is commonplace for first home buyers to feel pressured into paying a price beyond their budget or above market price. But it is extremely important to resist this temptation. Attend a few property auctions to familiarise yourself with the process. Also, be prepared for your search to get a little longer than anticipated. Your first home is, after all, a major personal and financial commitment you shouldn’t be compromising on.
Rely on professional help for the heavy lifting
Purchasing your first home can be quite overwhelming especially when you have limited experience. The real estate market is vast and navigating the complexities of securing finances for your first home can be quite challenging. Work with an experienced real estate agent to zero in on location, budget and property type as per your needs. When it comes to the financials involved in securing your first home rely on a mortgage broker to recommend a solution that precisely addresses your circumstances. The mortgage market is evolved, and you would be surprised at what the right product and service could do for you in terms of savings and flexibility.
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