Buying your very first home is a grand step in life, and it’s perhaps one of the most financially-confusing and challenging tasks for an aspiring homeowner. There is no denying that the Australian housing market is not cheap, and that if you are to procure a home in this economy while staying solvent and maintaining a positive credit score, you will need to plan and prepare your finances thoroughly.
Aside from scrutinizing every potential home down to the last stud and nail, and working on your negotiation skills to get the best price possible, you will need to consider other financing options that will allow you to become a homeowner before 2019 is over. With that in mind, here are the key ways to planning your finances for this very purpose.
Start by checking your credit score
Every home-buying journey begins with a thorough examination of your credit. This comprehensive document will give you all of the information about your credit history and current standing.
By doing this you will not only find out what kind of loans and mortgages you will be able to obtain as it stands, but also what are the key factors that are affecting your credit score and how you can fix it. If you’re unsure how to obtain your credit report yourself, simply contact one of the national credit reporting bodies.
These are listed on the government’s website, and the reports are free. Do this as early as possible so that you can build the rest of your home-buying strategy based on your score.
Tend to careful budgeting
When planning to procure a home, it’s important that you define your ideal price range. Seeing as how your plan is to become a homeowner in 2019, it’s important that you prepare with next year’s market and financial projections in mind.
Instead of looking at the current state of the residential real estate market, focus on researching the predictions for the upcoming year from reputable websites and forums.
Likewise, your price range shouldn’t reflect your current financial situation, but instead your next year’s projected financial standing. Based on the loan and the interest rate you will be able to obtain, your owned capital, the prices of homes in your preferred market, and the living costs associated with said marketplace, you will be able to determine what you can and cannot afford long term.
Given the fact that there will be other major expenses along the way, the next important step is to maintain a positive credit score no matter what.
Maintain a positive credit score
If you are to qualify for a mortgage that won’t leave you penniless in the years to come, you will need to submit a positive credit score to your lenders. Needless to say, maintaining a positive credit is not easy when you’re in the process of buying a new property, as you can easily lower your score by making a major purchase at the wrong time.
This is the reason low rate personal loans are popular in recent years among home-buyers looking to consolidate their debts, uphold their credit scores while preserving their livelihood, and making all of the necessary purchases to prepare themselves for this new and expensive chapter in their lives. Following the same mindset, you want to be smart about your spending habits in the months to come, and prioritize credit card debt consolidation in order to improve your credit score and prequalify for a good mortgage deal.
Create a down payment plan
All of the aforementioned steps will help you make a sound down payment plan, and give you the insights you need to prepare for this expense efficiently, without putting a major dent in your budget. As you’ve researched the market and made detailed forecasts about your 2019 financial situation, you can now determine how much you need to save up to make that dreaded down payment.
You should also devise a plan on how to save up for this expense over the coming months. A sound plan of attack would be to determine the amount you need to set aside on a weekly or monthly basis in order to make this expense viable. The key here will be consistency, so make sure you make regular contributions on set dates towards this goal.
Prepare for the living costs
The last piece of this financial puzzle is to take all living costs into account when researching possible homes. The location of the property will be able to tell you plenty about the average living costs in the area, but you also want to dig deeper and research the neighbourhood thoroughly.
Every penny counts, so make sure to include accurate calculations into your financial plan in order to create a comprehensive overview of your long-term finances.
Buying a home is one of the grandest steps in life, and as such, it requires thorough planning and preparation in order to yield the desired results. By following these steps, you will have paved the road to becoming a homeowner before the end of 2019.
About the author…
Keith Coppersmith is an Adelaide based consultant with a degree in Media Management. Born in a small town in New Zealand, big dreams brought him to Adelaide, where he carefully tends to his numerous small business projects. When not engaged in a busy city lifestyle he enjoys coming back home to NZ to relax and write.
Looking to buy your new home or investment property? We’d love to help guide you through the process. Give us a call on (08) 6254 6333, or take a look at our current listings for sale here.