5 things to consider before Buying your first Home
5 things to consider before Buying your first Home is in collaboration with LoanDolphin.
When I moved to Sydney from the UK in 2007, I was so surprised at the number of people who rented rather than bought a home there. It just wasn’t what I was used to. Very quickly it became apparent that the Sydney housing market is incredibly difficult for many young professionals and families to buy into and pricing are going up all the time.
We rented there for 5 years before we felt like we were in a strong enough financial position to purchase our first home.
I was 7 month’s pregnant when we moved in to our cosy 2 bedroom house in the Inner West – and it was lucky we moved in then because I had the baby early just a few weeks later!
Previously, I’d bought houses on my own, in a buyers’ market and when my income was higher but this time around we had to make bigger considerations as joint buyers starting a family. I thought I’d share from my own experience some things for you to consider before buying your first home:
1. Work out your budget
Rather than simply finding out the amount a bank may lend you, work out what you can actually afford. The last thing you want is to move into the house of your dreams only to find you can no longer afford to ever leave it.
We made a list of all of our outgoings from what the home loan repayments would be, all the way down to my husbands’ daily coffee purchase.
Looking at the list of outgoings, we could see if there were any areas we could cut back on spending in order to free up some extra funds for the new home.
2. Get the right advice
You might be tempted to only apply to your own bank, and that might end up being the right choice, but spend a bit of time researching to find out where the best rates for you are.
As a first-time buyer, I found this quite daunting. I had no idea what was even considered a ‘good’ rate and apart from the big name banks, I didn’t know who else to contact for the right advice.
I’ve recently discovered LoanDolphin, a marketplace where banks and brokers compete to win your home loan with their best offers tailored to you. I found the concept so innovative as when it comes to securing a home loan, it is often the borrower at the mercy of the bank, not the other way around! LoanDolphin offer a free, no obligation service and you can find out more about it by visiting their website here.
I talked to the guys at LoanDolphin about how they work to get their customers the best deal possible on their home loan:
“Recently a customer came to our website and he had a pre-approval from one of the major banks and a 20% deposit for an off-the-plan purchase. The bank valuation came back lower than the property sale price so he was hit with a $12k Lenders Mortgage Insurance bill. He heard about LoanDolphin from a friend and came to our website and within 48hrs he had multiple offers from experienced brokers and bank lenders who could connect him with the right bank which used the sale price instead of valuation and he instantly saved $12k just by getting the right advice. All banks are different so choosing the right one for you is a very important step but traditionally it took a lot of time and effort, that’s why we created LoanDolphin.”
3. Save Save Save
If I could turn back time, I would have started saving money from a much younger age.
At the point you do decide to look for a new home, start saving what you can from that point, if you haven’t already. The bigger the deposit you put down on a new home, the lower the home loan needed and the lower your monthly repayments will be.
4. Reduce your debts
To put yourself in the best financial position possible, try and pay off any outstanding debts you have. I had old store cards still in my name that I hadn’t spent on in years so I contacted those companies to close the accounts.
Pay off as many balances as possible and reduce your debts and outgoings.
5. Consider the hidden costs
As well as the home loan payments, buying a house comes with extra costs that you might not have considered.
You’ll need to pay for searches, legal fees, insurance, stamp duty and rates so bear these costs in mind when you’re working out your upfront costs and your monthly payments after you’ve bought the house.
It’s also worth considering if other outgoings will go up or down when you’ve moved. Will you be travelling further to work each day? Will your car insurance go up or down when you change postcodes?
These are just some of the things you might want to consider before buying your first home. Buying a house, especially your first family home, is such an exciting milestone and being as prepared as possible will set you and your family up for a happy future.
Do you have any tips to consider when buying your first home?
Disclosure: I am not qualified to provide financial advice, these are simply my personal tips from my own experience.