Buying a property is often considered the great Australian dream, a house of your own is a worthy goal many people are striving towards. However, often it can be difficult to know where to start. The most important thing about goals is to have one that you feel is attainable. Here at Life Beyond Numbers, we share a lot of information about mindset and goal setting, as this is the first step. Many say what you can see in your mind you can hold in your hands. However, many practical elements need to fall into place too – and this is what we specialise in. We work hard to support you in achieving your dreams and goals, and through the process, we’ve learnt 5 crucial steps to help clients become homeowners:
1. Decide and Assess
The first step towards homeownership is deciding that you want to buy! Decisions are powerful tools, and deciding to go from renter to homeowner is a big one, now watch as things shift for you. Upon deciding you want to be a homeowner, you need to assess your financial situation (And this is something we can help you with, talk to us). Assessing your situation (and your partner’s) will give you an idea of your borrowing power, what and where you can afford to buy a house. Emotional and lifestyle factors should be considered – ask yourself, what does your ideal life look like in 5 years? It may be better for you to ‘Rent-vest’ – that is continue renting where you are and buy an investment property, or it may be better for you to buy your Permanent Place of Residence (PPR). Making a decision and assessing your situation is the first step
2. Finding the right loan
Finding the right loan that suits you requires professional help and we encourage you to get in touch with us if you are at this stage. There are many different loan products out there. Do you require a fixed or variable interest loan? Do you need an interest-only or principal and interest loan? How does this affect the other parts of your life and income? Do you have children to consider? Finding the right loan that’s suitable to your needs and gives long term benefit is critical to your everyday living, and it’s very important that your servicing of your loan is manageable. Should you choose the wrong loan with hidden fees, your mortgage becomes a costly pain point in your life.
3. Prepare for the real costs
To acquire a home a 10% deposit is required (10% of the cost of the home) however to avoid LMI (Lender’s mortgage insurance) often banks require a 20% deposit, so the Loan Ratio is 80/20. This often means you need quite the sum of money to get a house. Budgeting and being mindful of your spending is necessary to first build this deposit, and also afterwards when you have a house. Ensure you have a budget in place and keep an eye on your spending. Know your household cash flow, how much you earn and how much you spend. Be mindful when applying for a home loan, banks will review your last three months living expenses in your account.
4. The search begins!
Now the fun begins, searching for your new home! Be mindful of what area you want to live in and how this sits within your serviceability. Are there amenities around that are important to you (schools, churches)? Is this an investment or a residence for you? Often the suburbs next to ‘booming’ suburbs are a good choice as their value is yet to go up. Also, consider transportation around the property, is it a place you may rent out and would it appeal to potential renters?
5. Make an Offer
When you’ve found your home, the next thing to do is to make an offer on the house – if it is a private sale and not an auction! A private sale is ideal for first homeowners because they can negotiate the terms of the contract. Including putting in clauses like ‘subject to finance’ and ‘subject to building and pest’ – this isn’t always an option with auctions (unless you’re the highest bidder). After your offer has been accepted and before you obtain the keys, a few important items need to be settled such as stamp duty and insurance. We strongly advise you to seek assistance during this step, it’s best to get help before entering into any legally binding agreement. Should your offer be accepted, follow the buying process and then enjoy moving into your first ever house!
Homeownership is quite an achievement and we thrive on supporting people to achieve such goals. If homeownership is something you’ve been striving for, feel free to contact us to discover how we can be of assistance. At Life Beyond Numbers we enjoy squaring away the numbers so you can live an inspired and meaningful life doing what you enjoy, talk to us today.