How To Set The Budget While Buying Your First Home?
Buying your first home as an investment is like a realization from vision to reality for Australian youth. But, one would be amazed at the thought of how to plan to buy their first home.
The first thing that will come to mind will be the overall amount you need to invest. There are other thoughts as well, for example, how you can arrange the amount for the property deposit.
All things said and done, it is advisable to prepare a budget beforehand so that, at the time of buying a home, the expenses associated with the home purchase do not stress you much.
Before managing your savings for a home deposit, let’s begin with knowing the various lending options available for a home purchase.
1. Get Clarity On All Lending Options
An individual needs to enquire about housing loan lenders to arrange the funds. While comparing lenders, you need to have full information about their terms and conditions including their specific credit policy, interest rates, and settlement structure.
Selecting the right home loan is crucial as it affects the overall budget. Different home loans have different features. Given below are some types of home loan options available for you.
- Fixed Home Loan
The current time interest rates will remain for the entire loan period. Fluctuations in the interest rates do not affect your payments of interest on home loans.
- Interest-Only Home Loan
This type of loan is limited to a lifespan of 5 years, where one pays only interest on the loan. However, the housing loan lenders or the bank sees your credit score to approve this type of loan.
- Line Of Credit Loan
You can apply for this loan after owning property and use the amount on ongoing expenses. But you need to pay it back on time as the interest rates can be higher if the amount is not returned.
- Variable (Principal And Interest) Loans
The home loan interest rates depend on the interest rates set by the Reserve Bank of Australia. Thus, interest payment varies as rates fluctuate.
2. Factor In The First Home Owner Grant
The government offers various stamp duty concessions to ease some financial burden on first-time buyers. Being aware of all the financial assistance provided by the Australian government is vital for first-time home buyers.
One of these grants is the First Home Owner Grant (FHOG), where a one-off lump sum is given to first-time home buyers. Different states and territories in Australia have different eligibility criteria for FHOG. Having full knowledge of the eligibility criteria is essential to avail of financial assistance.
3. Find The Amount Needed For The Home Deposit
Before starting saving and searching for home loan options, you must calculate the total amount needed for the property deposit. An appropriate 20 per cent of the total price of property needs to be deposited.
However, home deposits can be as long as 5 per cent. That said, paying a large percentage of the amount as home deposits can help you reduce estimated ownership costs.
The reason is simple – you will need to borrow a smaller amount as a home loan. This will provide you with good options for home loans at better interest rates. The value of a home deposit differs based on locations, property sizes, and the market situation.
You will need to know about various factors on which a home deposit amount depends, such as buying your first home with a minimum deposit.
4. Save For The Home Deposit
If you are planning to buy your house, saving for the home deposit has to be your priority. The sooner you start saving, the sooner you accumulate the amount for the property deposit.
Instead of saving what’s left after the expenditure, put aside some of the amounts as saving and then spend the rest. Cut back on your expenditure on things that are of less significance.
Only saving and putting it into a bank account will not be a smart move. You need to know how you can earn from the saved money. Look for various investment options which will help you grow your money.
5. Understand All The Hidden Costs of Buying A Home
The amount needed for buying a house is not only the estimated ownership costs that include the home deposit, interest payments, and repayment plan of the home loan.
But, there are many other costs associated with home buying. Some of these are listed below.
- Registration and stamp duty
- Parking and annual maintenance charges
- Brokerage fees
- Processing fee on your home loan
- Extra charges for location preference
- Peripheral expenses
Awareness about these hidden costs will help you manage all the extra costs on time without disturbing your budget.
How Consulting With Property Investment Experts Can Help Build A Budgeting Strategy?
First-time buyers face lots of problems while purchasing their first home, like finding a property location, choosing home loan lenders, and planning their budget.
Thus, you need to get advice from professionals like at Quarter Acre, to make the right investment decision in the real estate market. Consulting with property investment experts benefits you in many ways.
- Information about property deposit requirements
- Finding the right lenders or mortgage brokers
- Information about government schemes and grants
- Looking for the most suited properties under your budget
Therefore, real estate agents will help you find an honest home loan provider and check all the information beforehand so that you get a loan at a genuine interest rate and not fall into a scam.
They will make you aware of various stamp duty concessions provided by the Australian government. According to your financial status, property investment experts will build the right budgeting strategy for you. Feel free to contact us to get an understanding on how we can help.
Conclusion
You need to be conscious about your borrowing capacity along with your savings. Knowledge of your finances will assist you to plan how much to borrow for home purchases and how to grow your savings.
Achieve your dream of buying your first home with the proper assistance from property consultants Quarter Acre provides you with real estate experts to set your budget and find the right property under your budget.
Thus, start saving early and manage your finances congruously for your property deposit.
