Home ownership might seem like a rite of passage for many Australians, so it’s easy to understand why so many of us underestimate how utterly daunting buying your first home can be.
The excitement that goes along with the idea of carving out your own little slice of domestic heaven can make it difficult to stay focused on the gravity of the situation. Yet once you get your head out of the clouds, the hard realities of home buying can make the whole experience seem a little more overwhelming.
Unfortunately, there’s a little more to buying your first home than wishing it into existence. That would be nice though wouldn’t it? However, from the substantial savings needed to take the first step, to the increased level of responsibility necessary with such an undertaking, purchasing your first house is not something to take lightly. So, if you’re wondering whether or not you’re prepared to take this giant step into the property market kingdom then you’ve come to the right place. I’m going to take you through the top 5 signs that will help you know if you’re ready to buy your first home.
1. You have a stable income
While everyone is just trying to get by as best they can, having a consistent history of full-time employment is going to be one of the most essential factors that determine whether you’re ready for home ownership. Not only is it going to mean that you’ll be in a position to repay your mortgage without getting into financial hardship, it’s also one of the first things that a loan provider will check out when you go to apply for a mortgage.
This doesn’t mean that you will be ruled out if you’re self-employed though, the key thing you need to prove is that you’ve maintained a consistent (and sufficient) level of income for at least 2 years prior to applying for a loan. This may vary depending on the institution, though this is generally the rule.
2. You have the down-payment
This might seem like a no-brainer, but you’d be surprised how many people get ahead of themselves. However, saving for your housing deposit is arguably the most important step in this entire process, if not simply due to the fact that loan providers will require a down-payment before approving an application.
The amount of which is usually 15-20% of the price of a prospective property. For many people, saving for a home deposit can seem like an unfathomably intimidating expectation, with a large portion getting rather disheartened along the way. It’s not an easy thing for most, and it will take a great deal of hard work and the ability to sacrifice immediate pleasures for future gains. Yet just keep in mind that once you’ve succeeded in doing so, that will be the hardest part!
3. You have an A+ rental history
This might seem a bit left of field, and truth be told it is not essential. However, if you can prove to a financial provider that you have a good rental history, you’re going to get bonus points that could vastly improve your chances of being approved for that much coveted home loan. The crux of having a respectable history of tenancy is that it shows you can be trusted to make your payments on time. This way your loan provider can rest easy knowing that you have a proven track record of being financially reliable.
When it comes to showing financial institutions that you’re prepared to take on a home loan, stability and consistency will always be the key.
4. You know your budget
This is crucial and goes hand in hand with having a good working knowledge of the property market. If you’re well-versed in current housing prices and demand within a given suburb, you’ll more easily be able to determine which areas you can and can’t afford. Since the real estate market can fluctuate at the drop of a hat, it’s a good idea to have a comprehensive understanding of the ebbs and flows within the system. That way you can feel a lot more certain that you’re making a well-informed decision when the time comes to choose that lucky future home of yours.
5. Your credit rating is excellent
This might seem like a rather boring point to end on, but it truly goes without saying that having a good credit rating is of paramount importance and will oftentimes be the one thing that can make or break a home loan application. Your credit rating is likely going to be the very first thing that a lender will check. They will need to assess your credit history to see if you have any outstanding loans, any history of defaulting on payments, and how many accounts and credit cards you’ve applied for.
If you have no idea what your credit rating sits at, take it upon yourself to do your own assessment online. It’s completely free, quick and easy, and will let you know exactly where you stand. This way, if the outcome isn’t as favourable as you might have hoped, you can take the time to reassess your plan of action before applying for a home loan. If things look rather bleak, it might be worth talking to a financial adviser so you know exactly what steps you should be taking.
Are you feeling ready to buy that dream home now? It’s 100% OK if you’re not entirely prepared to take the plunge at this stage, just remind yourself that you’re working towards a life changing goal. Something that huge is going to take time and serious preparation, so there’s no need to rush.
Once you do find a prospective forever home, don’t forget to give Building Masters Inspections a call to assess the property from top to bottom and ensure that this is in fact the perfect home for you.