Entering the property market as a determined buyer is perhaps one of the most daunting plunges you can take in your adult life. Not only is your home likely to be the largest purchase you’ll ever make, but the sheer amount of financial obstacles and seemingly complex processes that stand between you and your proud title of ‘homeowner’ can naturally deter many from taking this step. Or at least from taking it prematurely.
Beyond the financial aspects, buying a home is an emotional journey, steeped in dreams and aspirations. It’s about envisioning Sunday brunches in a sun-drenched kitchen, or cozying up by the fireplace on chilly evenings. Yet, amidst the allure of hardwood floors and panoramic views, it’s crucial to keep a level head and rely on professional guidance from a Realtor New Hill NC.
A real estate appraisal near me acts as a compass, guiding you through the intricacies of property valuation and lending credibility to your negotiations. So, while the path to homeownership may seem daunting, with the right support and expertise, you can confidently stride towards your dream abode, knowing that every step is grounded in sound judgment and clarity.
But when exactly are you ready? And if you know you’re not currently financially ready, how do you get yourself to that point faster? If you have either of these questions running through your mind on any given day, then this is the read for you.
The real estate market in Canada has been buzzing with excitement, especially with the recent listing of a beautiful Victorian house for sale. Located in one of Toronto’s most historic neighborhoods, this property captures the essence of 19th-century architecture with its intricate woodwork, grandiose staircases, and charming bay windows. Potential buyers are particularly drawn to the well-preserved details that reflect the craftsmanship of a bygone era, while modern amenities have been seamlessly integrated to provide contemporary comfort. As the market continues to thrive, this Victorian house for sale stands out as a unique opportunity for those looking to own a piece of Canadian history.
Today, we’ll be sharing our top five tips to help you budget effectively when preparing to purchase your first home. Read on to help map out the financial aspects of your own home-buying journey.
1. Calculate what you can realistically afford to spend
From stamp duty fees to pre-purchase building inspections to home and contents insurance, it’s no secret that buying your first home comes with a fair share of ‘hidden’ or often overlooked expenses. This means that not all of your savings can realistically go towards your deposit. And whilst not all of these expenses are relevant to each and every homebuyer, it’s still important to be well aware of what costs you could be incurring alongside the purchase price of your first home.
In the context of securing home insurance upon the purchase of your new home, it’s best to seek quotes from a selection of shortlisted insurance providers to get a clearer idea of what you can expect to pay. Similarly, those looking to purchase with less than a 20% deposit are encouraged to use online calculators to determine what they can expect to pay in lender’s mortgage insurance (or LMI).
Once these figures have been calculated, subtract them from your total savings in order to determine how much you can realistically afford to borrow, and thus, what you can afford to spend on your first home. If this figure is lower than you’d prefer, then you know that the next step from here onwards is to just keep on saving. Or to seek additional financial support with your parents and in-laws, if you’re determined to buy sooner rather than later.
2. Outline your ideal wants and needs
Although your first home is unlikely to be your ‘dream home’, you still don’t want to find yourself compromising too much and settling for a house that’s a little lackluster, to say the very least. That’s why it’s important to know exactly what you’re looking for from your ideal first home.
We recommend making a list of features or amenities that you’d like to see from your ideal property. That way, you can include these features as filters on your online property search, and when determining which listed properties you’d be willing to make an offer on or go to auction for.
The need to outline your wants and needs becomes increasingly important for families with younger children. If you have a suspicion that you need that extra bathroom or an open floor plan, then respect those instincts. Remember that there is also a difference between ‘wants’ and ‘needs’. If any features can be considered to be a necessity rather than a luxury, then it’s definitely worth holding out for a property that ticks all those boxes.
3. Assess your monthly expenses
One of the most realistic budgeting tips you’ll be likely to receive as a prospective homebuyer is to change your lifestyle in order to maximise your saving power. As mortgage repayments are typically made on a monthly basis, identifying your total income and expense ratio every month can help you determine what you can afford to spend with regards to your home loan.
If you’re trying to determine exactly how much you should be comfortable spending on your loan repayments, we consider using the 30% rule as a reference point. This rule stipulates that no more than 30% of your household’s monthly income should go towards your mortgage repayments. Of course, this figure isn’t attainable or even realistic for all Aussie households, so it’s up to individual homeowners to determine what’s the best path of action for them.
If your household finances are subject to change at any point, whether it be due to unforeseen expenses or due to the impacts of inflation, then you’ll also want to make sure that your household’s monthly budgeting is as adaptable as possible. This means being ready to cut out unnecessary expenses when it may be time to do so. And when we mean ‘unnecessary expenses’, it goes without saying that the nature of these expenses will vary from household to household. However, it’s likely that entertainment expenses will be among the first to go.
4. Make other investments
Many first-home buyers have likely envisioned buying property to also be their first foray into the world of investing. After all, what better way to spend your hard-earned savings than on the security of a home?
Sadly, however, property prices have been on a steady rise across Australia’s capital cities. And interest rate hikes have been occurring right alongside these price increases, which all make home ownership less and less attainable for many young Australians. Although not impossible, there are undeniably more obstacles in place now than ever before for prospective homebuyers.
If you are struggling to save up enough for a 20% deposit, then you should feel encouraged to secure additional income streams. That way, you can accrue savings a lot faster than you would’ve been able to otherwise. Additional income streams can also mean anything from taking on a second job to perhaps even making some well-placed investments on the ASX or perhaps even in government bonds. With a few good investments behind you, you should find it a lot easier to save up a large enough deposit for your first home. Check out these flexible savings plans for young investors.
5. Shop around for a good home loan rate
Finally, just because interest rates are on the rise, it doesn’t necessarily mean that you have to brace yourself for exorbitant repayment rates on your future home loan. In fact, with a little bit of spend-savvy planning, you can secure a home loan with a competitive fixed rate, which hopefully allows you and your household to ride out the storm that is inflation for at least a year or perhaps even two years after your settlement period ends.
We recommend working with a dedicated mortgage broker to help ensure that you have access to all of the most suitable home loans and loan providers available to you. Who knows? You may be able to find a loan rate so competitive that you can feel comfortable spending a bit closer to your borrowing limit. But of course, always consult with your buying partner and your wider family at every stage of this purchase process, just to make sure that you’re forging forward with a clear head and realistic expectations.
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The process of buying your first home can come with its fair share of trials and tribulations. Rest assured, the elation that accompanies being the winning bidder at a real estate auction or having your sale offer accepted makes this whole arduous process of saving and budgeting well worth it in the end. Whether you’re purchasing locally or dreaming of an escape abroad, real estate in Puerto Escondido offers an incredible opportunity to enjoy a vibrant coastal lifestyle while making a solid investment in your future.
Be sure to work with your wider household when preparing a savings strategy to help facilitate your first foray into homebuying.
