Buying property is the great Australian dream, but jumping in too soon can cause problems. Here are just a few signs that may suggest you are not quite ready to buy property.
Buying property is a major dream for many Australians, but jumping in too soon can have a significant impact on your life.
Buying in a bad area, borrowing more than you can cope with or buying a ‘renovator’s delight’ that ends up being a dump, can all cause major problems down the track. Listed below are just a few signs that may suggest you are not quite ready to enter the property market.
Not financially ready
If you have not saved a sufficient amount of money for a deposit or factored in how much money you will need to set aside for the monthly repayments, then it could be a sign that you are not quite ready to buy.
You need to be completely honest and transparent when it comes to managing a home loan. Not factoring all expenses when creating a budget will only hurt you down the track. A Quick Quote is a great way to calculate whether you could afford a certain amount depending on your current financial situation.
Even if you aren't financially ready now, stick to your savings plan, chat to a few lenders and understand the numbers. Best case you could only be a few months away from being ready.
Not ready personally
Whether you wish to purchase an investment property or a home for yourself, you need to make sure you are personally ready for the commitment. For example, if you regularly travel for work, then owning and maintaining your own home may be more difficult. Have you got a stable job or, if you are purchasing with another person, is the relationship rock solid.
If you are considering purchasing an investment, you need to ask yourself whether you could handle the responsibilities of being a landlord. Will you be responsive towards your tenants and have the motivation to keep the property maintained? If not, then it may not be the right time to purchase an investment.
You are not interested in insurance
If insurance just seems like another optional extra cost, not a requirement, then that should be considered a red flag. If you are the main income earner and have a partner and/or children, then how would your income be protected if you were to fall ill or have an accident? Income protection can provide a safety net if this situation was to occur.
Home and contents insurance as well as landlord insurance (for investment properties) should be included in your budget, but if you currently can’t afford it or don’t think it is a necessity, then you may not be ready to jump in and purchase just yet.
You haven’t thought about other ongoing costs
Similar to the point made above, there is a lot more that goes towards buying a property than just the mortgage repayments and if you don’t cater for these costs, you could be in significant financial trouble.
Some of the costs that you may not have had to pay while renting or living with your parents include: council rates, strata fees, gas and electricity, telephone and internet, property management costs (for investment properties) as well as ongoing maintenance costs. If you do not have a stable, regular income then taking on a huge financial commitment, such as purchasing a house, may not be the best idea.