How much can you afford?
Just because you get approval to borrow a huge sum of money, doesn’t mean you should. Using home loan calculators is a great way to work out how much you should borrow but there are a few extra factors to consider before you begin crunching your numbers.
Your first task is to make a list of your current and future needs and expenses. Don’t forget to factor in future plans such as having children. Will you or your partner be taking maternity/paternity leave?
Can you still afford to make your repayments if someone becomes ill, loses their job, is planning to take a sabbatical, or commence some form of study?
Don’t start looking for a property before you have pre-approval for a loan amount. It’s a futile exercise to fall in love with your dream home, and then not be able to finance it, or to take too long to get finance approved and miss out because someone else is more organised. Worst case scenario is losing your deposit at auction because you can’t come up with the balance.
Where will you live?
There’s a good chance you’ll be moving areas when you buy your first home. Always consider some key factors such as how far you’re willing travel to work. Are the monthly cost of extra petrol and tolls prohibitive? If you use public transport, will you need a bike and a packed lunch to reach the train station or bus stop? Also consider proximity and standard of local schools, shopping centres and recreational facilities. Finally, research recent home sale prices and auctions in your preferred areas. Investigate market trends and suburb statistics and make an educated decision.
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