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Getting Started

Before you start looking to find your first home there are a few things you may like to consider first;

How much can I afford to pay?

You need to consider that whatever minimum mortgage repayment you are quoted, is most likely to be based on a 30 year loan term. Should you want to pay the loan out in a shorter time frame, you will need to budget for a higher repayment. Also it is wise to allow for a little interest rate movement when working out how much you can afford as well. An extra $50-100 per week will go a long way to giving you a buffer against upward rate movement and help you pay out your loan much sooner.

How much can you borrow and how much can you afford?

At some point in the first home buying equation, you will be presented with a maximum borrowing figure. Most people when presented with this figure are a little surprised. The main reasons being it was far more than they had planned on borrowing. In some cases when banks calculate your maximum borrowings, they only leave enough money spare for basic living expenses. So if you enjoy going out and a few of the finer things in life, it may be wise to find out how much your future repayments will be and put that amount for a few months before beginning to shop for your first home This will give you an idea of what it is like living with a mortgage, before your contracted to pay one. You then know exactly what your getting yourself into and will go into your first mortgage with your eyes wide open. You also hear it said a lot, but it is sage advice "borrow less that you can afford to". That way you can hopefully pay your mortgage back faster and move on to bigger and better things.

Develop a budget!

If you have been living at home or renting, you will find there will be a few extra bills associated with owning your first home. It is important you get an idea of what these can be, and set aside some money for them. Things such as Council Rates, Water Rates and Body Corporate fees (for strata titled properties) you can ask the seller, or selling real estate agent about, though many Real Estate agents now provide this information in their property advertisements. There are a few other things such as building and contents insurance, loan or income protection insurance, water consumption, power, gas  and maintenance costs that come along with home ownership. So a budget that takes all of these into account is a must! To access our budgeting tools click here.

Many Mortgages these days have redraw facilities attached, please check with your finance broker to see if your loan has this facility and ask for the terms and conditions, as there may be a fee and a minimum redraw amount associated with using this feature. But if your bills work out to be around $3,000 per year, by putting around $60 per week extra in your loan, you will have enough to cover your expenses though out the year, also you will save a small amount of interest along the way! Some things such as rates and insurances that you can pay in installments work out cheaper if you can save to pay them in one hit also.

A budget will help you navigate your bills far more easily than waiting until they are due and having a mad scramble to save up for them, for some help in working out a budget click here and for finding out how much you can borrow click here.

The 7 steps to buying your first home