What Can You Afford When Buying a Property in Sydney?
So you’ve started to think about buying a property in Sydney? First home buyer, housing affordability – these are just some of the words that may be running through your mind.
What can I afford? Where should I start looking for properties? How much money do I need for a deposit? These are all valid questions that will help you figure out what you can actually buy and how much it will cost.
In this blog post, we’ll look at some strategies to help with those first steps into the world of property ownership!
There are many factors to take into consideration when buying a property in Sydney. First, you will need to know how much money you have for the deposit and what kind of loan you can afford.
There are two types of loans available: First Home Buyer (FHB) loans and Standard Variable Rate (SVR). First home buyers often struggle with the lack of information on how much they can borrow from their bank because not all banks offer FHBS, but if your credit history is good enough, then it should be no problem at all.! First Home Buyer loans are also known as Lender’s Mortgage Insurance (LMI) because the bank insures this type of loan.
Next, let’s talk about the deposit. For first home buyers in Sydney, it is common to require at least a 20% deposit before banks will agree to finance your purchase of the property. For some properties, banks may also agree to finance your property purchase at 10%. However, for these situations, always consult a professional mortgage broker.
Now that you have a better idea of what First Home Buyers are, let’s talk about the next thing on your mind: affording to live in Sydney.
The average price for an apartment in Sydney is currently at $690,000 while houses cost around $930,000. Therefore, if you were looking to buy a house as your first home, it may be very heavy in your pockets. The last thing you want to do is burrow too much money from the banks, creating financial constraints on your balance sheets. Start small, but start smart. Start from an affordable unit with which you can generate some equity whilst you plan to buy a house in the future.
The first thing is saving money and not spending more than what your budget allows. Make sure you know exactly how much balance sheet capacity you have before embarking on buying property in Sydney.
Once you are well aware of your finances and your burrowing capacity, its time to decide where you will buy your first home (apartment). Picking a suburb to live in will depend on multiple factors. First of all, how much are you willing to spend on your home loan repayments.
It is essential that you pick a suburb where the median house price fits within this budget. If not, then it will be extremely difficult for you to afford an apartment in Sydney without stretching yourself too thin financially.
First-time buyers should also consider transport links and proximity to shopping centres for their groceries. Young parents should think about close proximity to the schools.
One other very important thing to consider, which a lot of first home buyers forget is indicative gross rental yield. When you buy your first apartment as a home to live in, one day you will leave this place for a bigger house, so you may decide to keep this apartment for your rental income. When you purchase an investment property, it is important to consider this income as extra cash flow.
First home buyers may not understand how the rental yield works and does not take into account your imputed rent – that is, what money would be earned if you were renting out your place instead of living in it yourself.
Last but not least, the quality of the apartment you are buying should be a critical part of your decision. Is there a perfect synergy of quality, value for money and location? The perfect apartment may not exist, but there is a good chance that you can find an apartment that ticks at least two of these boxes. First home buyers should definitely consider buying off the plan. Not only do they ensure your investment will be in a well-established and reputable development – it also means you could get up to 15% discount on the market price.
Sydney is a booming city and there are many factors to take into consideration when buying property in this region. What type of home do you want? How much time can you spend commuting each way, or would living closer to work be better for your lifestyle? The list goes on and the decisions only get more difficult as soon as we start talking about what’s important to you. If these questions have left you feeling overwhelmed, give us a call .We will help guide you through all aspects of buying property in Sydney so that it feels like an easy decision rather than such a weighty one.
