1. You Have the Deposit
Buying a home is a major investment, so you’ll likely need a loan from a bank, financial institution or mortgage broker. In exchange, you will usually be required to give a cash deposit of 10 per cent of the value of the house.
There are also solicitor fees, home loan establishment fees and settlement costs that you need to pay for. These expenses will cost you somewhere in the neighbourhood of two and seven per cent of the value of the house.
2. You Have Calculated How Much you Can Afford
The amount of your monthly mortgage repayments should be less than or equal to 25-30 per cent of your total monthly income. You will have no trouble paying your monthly mortgage if all your outgoings, including credit card bills, car loan, living expenses and mortgage, do not go beyond 30 per cent of your income.
There are many online calculators you can use to help you determine how much you can borrow. Use this as a guide only.
3. You are Knowledgeable about the Market
Conduct research when you are purchasing property. Gather information about the market you are buying into and take note of sale prices, not asking prices, because these can quite vary. In addition, get an update on the present state of the market from your real estate agent or advisor. Make them your friend! Determine if there are more for-sale properties on the market than buyers, or are many buyers competing for few properties?
4. Your Credit Rating is Good
Your credit history will be scrutinised by your mortgage broker when you apply for a home loan. It will let them know whether you are eligible for a loan or you are risk. Your credit history provides information on the past loans you have applied for, whether these loans have been paid out, existing debt, the number of bank accounts you own that are open, and more.
It is important to check your credit history/rating before you apply for a loan because you can check the accuracy of the report and correct any errors you may find in it.
5. You are Aware of the Commitment
Before making a commitment, make sure you are fully aware of the ongoing expenses including utilities, council rates, insurance, owners’ corporation levies and general maintenance.
If you answered “yes” to all signs above, then you are all set to make your first home purchase.
What you need to do next is to secure a pre-approval for your home loan. This will allow you to make an offer straight away when you find the right property.