As house prices rise across the country, getting into the property market becomes harder and harder. Still, to this day, most people would simply like to own their own home. However, determining the correct time to buy is not always that simple.
Here are some considerations you should take into account before buying your own home.
Income
It could be suggested that your income is actually more important than the size of your deposit when it comes to buying a home.
Banks and lenders are very focused on your ability to service a loan, which is a product of how much you earn and how much you spend. If you don’t have an income, it is very difficult to get finance from a lender.
For that reason, you might want to wait until you’ve increased your income as you climb the ladder in your job or until your business has grown.
Rent or Buy?
Just because your income isn’t where you want it to be right now doesn’t mean you can’t still invest. If you do have a deposit together, it is possible to rent where you want to live and buy elsewhere. This is commonly known as ‘rent-vesting’.
The benefit of rent-vesting is that the rental income you receive counts towards your serviceability.
Rent-vesting allows you to get on the property ladder sooner than you might have been able to otherwise. The added bonus is that it is often possible to rent in a far better location than you could otherwise afford to buy into.
That means you get to have the benefit of living in a great suburb without having to pay for it.
Look at your Deposit
If you are ready to buy your own home and you do have the income to buy now, but not the deposit, the good news is there are a number of options.
First home buyers are highly incentivised by most state governments and it’s likely you will be exempt from stamp duty, which makes saving a deposit far easier.
Similarly, lenders also have a range of loans that allow you to borrow 95% or more of the property value, with the help of a guarantor. These types of loan products are very helpful when you’re starting out.
Credit Check
One of the most important things you need to have is a solid credit rating. If you’re young or still living at home, you might have never even had credit before.
A credit score is a track record of how you’ve dealt with debt in the past. Lenders want to make sure you are likely to pay it back.
If you’ve had credit in the past and managed it poorly, then a lender won’t look too kindly at your application. Get your credit score in order before you look to buy a home.
Speaking to a mortgage broker is the best way to assess your personal situation, and they can advise you on whether you should be looking to buy now, rent-vesting or waiting.
If you have a question or would like more information, please contact…
Steve
Mobile 0423 894 864
steve@bettermoneylenders.com.au
Brett
Mobile 0428 156 680
brett@bettermoneylenders.com.au
