For many Australians home ownership is important, but how do you know when it’s the right time to buy a house? Owning a home does have its advantages, however it’s worth asking yourself the following questions before deciding to buy a home.
Note, if you’re unable to answer yes to these three basic questions it may be worthwhile postponing the purchase (but not the dream) for now.
1. Is Your Financial House In Order?
How much credit card debt do you have?
Are you paying off a car?
Do you have personal loans?
We live in a consumer driven society that encourages us to use credit instead of saving to buy what we want. If you are currently relying on credit to live then it may be wise to consider postponing buying a house.
Keep your home ownership dream alive by doing your house hunting research and speaking to a lender like State Custodians, but your first priority has to be taking control of your finances. If having a home and financial security is important to you then budgeting your way out of debt and into home ownership is achievable.
2. Have You Saved Enough To Afford A New Home?
As important as it is to have a good deposit there are a number of costs associated with home ownership which include the following:
• Costs prior to purchase such as building and pest inspection reports.
• Home and contents insurance.
• Solicitor/conveyance fees.
• Loan establishment costs.
• If borrowing over 80% of the purchase price there will be Lenders Mortgage Insurance.
• State stamp duty tax is payable on documents involved in the transfer of property between owners.
• Adjustments for rates and fees paid or payable.
• Removalist and other related moving costs.
The costs associated with buying a home need to be budgeted for because it means that you not only need to come up with the cash deposit but also the funds to cover all of the additional expenses. Remember, when making one of the most expensive purchases in your lifetime it’s important to make a financial decision before making an emotional one.
3: Can You Really Afford The Payment?
If the new mortgage payment is more than what you are currently paying (either as a mortgage or in rent / board) you need to consider if you are willing and able to make the necessary life-style changes to accommodate this.
If you are renting, the amount you pay to your landlord may end up being similar to the mortgage payment however, your principle and interest are not the only costs associated with owning a house. Although some of the following charges will be similar to those who rent its worth remembering the following ongoing expenditure items need to be taken into account:
• Council rates
• Water charges
• Water, sewer and garbage
• Strata levies (if applicable)
• Telephone & internet costs
• Repairs and maintenance
These charges will add hundreds to your monthly payment so remember to take these into consideration when using an online mortgage calculator to decide how much it would cost to own a home. The mortgage payment alone is only one piece of the puzzle.
So, Are You Ready To Buy?
Did you answer “yes” to each of these three questions?
1. Is your financial house in order?
2. Have you saved enough to afford a new home?
3. Can you comfortably afford your new monthly payment?
If you were unable to say yes to these three basic questions it’s probably a good idea to postpone your home ownership dream until you can. If you need any help in crunching the numbers give a credit manager at State Custodians a call to help prepare you for the reality of home ownership.