eNews - May 2017
This month, the Reserve Bank of Australia has kept the official cash rate on hold at 1.5% for the ninth month in a row. This decision was widely anticipated by economic and finance experts across the country given the current national and international environment.
Three Tips for Buying your First Home
Talk to me about how much you can borrow:
There’s no point wasting your time inspecting properties that are outside your price range. I’ll help you determine your borrowing capacity, set your buying budget and explain about applying for the First Home Owner Grant and making the most of any other exemptions and savings you may be able to obtain to help you get started.
The amount you can borrow will depend on the size of your deposit, your savings history, income, expenses and credit history. It’s a good idea to save 20% of the purchase price, plus the other costs associated with buying property like stamp duty, legal fees, building and pest inspections.
You may still be able to buy now even if you don’t have a 20% deposit. If you don’t have a 20% deposit, you may still be able to get a home loan, but you will have to pay Lender’s Mortgage Insurance (LMI) which protects the lender against any shortfall if you default on your loan and it has to be sold to repay your debt. Sometimes it’s worth paying LMI if it means you can get on the property ladder sooner, so talk to me and I’ll help you decide if its best to buy now or wait until you’ve saved more.
Get on the property ladder sooner rather than later:
In most cases, it’s a good thing to jump aboard the real estate train. The sooner you stop wasting money on rent and start making capital gains on your property, the better. But getting into the market sooner rather than later might mean compromising. You might not be able to afford your dream home immediately, but the property you buy may be a stepping stone to better things. If your desired location is too costly, you may have to consider buying in another suburb, purchasing an apartment or a more modest home, or finding a “renovator’s dream”. Remember, from little things big things grow and you can always trade up in future.
Learn how to research the right property to buy:
Once you know your price range, you can use it to find prospective properties to inspect and identify areas that you can afford. Location is key, but you also have to factor in affordability. Research the areas and properties you are interested in. Consider the capital growth potential, rental yields and proximity to schools, transport and other amenities.
If you need help with your property purchase, feel free getting in touch with me today!
Until next time.