Working out your finances might seem like a tedious task, but the sooner you have a financial plan the sooner you can start home shopping.
Crunch the numbers
A lot of people will start their home buying journey by talking to a lender, but don’t expect them to do all the hard work for you. You need to take control of your own finances and ask yourself what you think you can comfortably afford to pay each month, whilst also living the lifestyle you’ve become accustomed to. Only you ever really know what your spending habits are like and what budget you can work within. Which brings us to our next point…
Track your spending
Think about what you spend now because this will give you a pretty accurate idea of what you can afford to pay monthly. Don’t forget to include your rent and savings in your tracking, as this amount will be close to what you can afford to pay on a loan (however keep in mind that you will need to take into account expense such as rates and possibly renovations if you become a homeowner).
While you’re tracking your budget, look for areas you can cut back on and save. Perhaps you can stop getting morning coffees? Or ride to work instead of catching the bus? All those little expenses can add up over time and help you save for your home deposit faster. Plus, if they’re easy to give up, you might also be able to increase your borrowing amount.
Don’t forget to factor in added costs
There’s more to buying a home than the home loan itself. When figuring out your borrowing capacity, don’t forget to take in all of the extra expenses that come with home ownership and then give yourself a buffer in case there are any unexpected costs.
Some expenses you might need to budget for (this is a non-exhaustive list):
- Building/pest inspections
- Council rates
- Utility bills
- Stamp duty
- Strata fees/body corporate
- Conveyancer/solicitor fees
- Moving costs
It always helps to be conservative when calculating what you can afford so you don’t end up overstretching yourself later on.
If you would like to discuss your borrowing requirements then the team of brokers at Professionals Finance can help you.
Visit www.professionalsfinance.com.au to find out more, or give us a call if you would prefer a personal introduction.
For those who are ready to buy, feel free to browse our properties for sale on our website.