When should you buy a home?

Buying a house isn’t a decision you should rush into, and it’s hard to know when it’s the right time to take the leap. There’s pressure to own a house before you start a family, to have an investment or just to break into the property market. What’s more is we’re constantly flooded with stories about the housing market or interest rates, and ads for mortgages and loans are commonplace. With so much information out there, how do you determine the right time to buy for you? Here are some things to consider before you decide to buy.

What can you afford?

Before you buy your first home you need to know what you want, what you need and what you can afford. It’s important to be realistic here, as you’re signing up for what is potentially going to be a thirty-year mortgage. Ideally, you’ll have 20% of the down payment saved along with any funds you’ll need for stamp duty, establishment fees and solicitor’s fees. You’ll need to know what to expect financially and when you’ll be able to meet those expectations.

Do you have a plan?

If you’re buying a home, you need to be able to commit to living there for roughly 7 years, otherwise you’ll be losing money. So when you’re considering buying, and deciding what you need out of a home, you’ll have to think about the future. If you think a family could be in the cards in that time frame, you’ll need enough space for that to happen. Is there potential for a work relocation in the next couple of years? Do you have any elderly family members living elsewhere that might need you to move closer to them? These are a couple of things that you should take into account when making this decision.

What are you giving up?

Owning a home comes with a lot of incredible benefits, but what about the things you give up by becoming an owner occupier? If you’re thinking about investing in other avenues like building a stock portfolio, being a homeowner could put that on hold. You could lose the flexibility of being able to easily move to a new city, and this will be a hefty burden on your bank account! However, there are options that allow you to own property and get around these potential issues, like ‘rentvesting’ (buying a house but renting it to someone else and renting a place for yourself to live) or simply by ensuring you have more than enough in your savings.

What debt do you have?

By signing onto a mortgage, you are increasing your debt. This isn’t necessarily bad, however if you already have accumulated debt from credit cards or student loans, it may not be the best option. You could wait until your other debts are resolved, or a mortgage broker can help you through the process of consolidating your debt .

What if…?

This is a question that will vary from case to case, but it would go along the lines of the following examples. What if I lose my job? What if dad’s heart problems get worse and I need to move back home to help him? What if an earthquake strikes and ruins the foundation of my brand new home? Normally I would advise against jumping to a worst case scenario, but in this case it’s good, because you need to have a plan if the worst should happen. Again, it’s important to have a solid amount in your savings account because more often than not, that’s going to be the best plan you could have.

There you have it, our top things to consider when you’re deciding if you’re ready to be a homeowner. It’s a commitment and a responsibility, but it’s a great one to have! Buying a home gives you equity, increases your net worth and gives you power over your home. To find out if you’re ready to take the leap, contact your local mortgage broker and have a chat today.

Author Bio

Rebecca is a member of the Digital Community team at My Local Broker. Creating valuable and accessible financial content for the everyday Australian is a big part of her role, and she makes sure to stay on top . My Local Broker aims to facilitate lasting relationships between you and your local mortgage broker. Because local is better!

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