Buying a house is most likely one of the biggest purchases you will commit to. It requires mostly (if not all) of your savings, and securing yourself to a particular property. A decision that is mostly driven by numerous financial factors – both personal and broader economic issues – as well as emotional considerations.
If you’re on the fence about the decision, these questions may help you sort out many of the most important financial factors.
- How long will I live here?
In terms of building equity in an appreciating asset (usually), purchasing a home is one of the best ways to build wealth. It also requires substantial upfront expenses. As a general rule, it takes five to seven years for the benefits of homeownership to kick in.
On the flip side, the cost of renting will only go up over time, especially if your suburb becomes desirable or inflation rates increase.
- Is it a good time to buy, in terms of the economy?
This more or less relates to the cost of borrowing money for most homeowners. When interest rates are low, you’ll spend substantially less to finance your purchase over the life of the loan. In today’s market, the 30-year mortgage rate is approaching historically low levels.
- Is it a good time to buy, in terms of my finances?
Most banks prefer for you to have a 20% deposit before committing to the purchase of a home, so you avoid paying Lenders Mortgage Insurance (LMI). There are however many Government incentives, such as the First Home Owners Grant, which can help first-time homebuyers with their deposit.
Talk to your mortgage broker or bank to find the best loan type for you and perhaps look at ways to save some extra money, or perhaps improve your credit score.
- Does my local market favour renters or buyers?
It’s best to ask your trusted local real estate agent (we know a fantastic agency with plentiful of trusted agents) as they will be able to provide you with all the information on your chosen suburb.
Conducting some simple research on websites such as realestate.com.au or domain.com.au will provide you with a snapshot of what has sold in the area, and what current rental properties are asking for.
Here at Amber Werchon Property, we are able to assist in both sales and property management. So if you are in the market for your new or next home, or perhaps on the lookout for your next rental, our skilled and approachable team are here to help you. Call us today, and we’ll be more than happy to chat!