The great Australian dream of owning your own home is still alive and well for most people in this country, but it can be difficult to decide when the right time is to make the biggest purchase of your life.
When you buy, and where, is very much based on personal circumstance and what stage of life you are in. Our local vendor advocate has put together a few basic guidelines which can help you make the right decision.
Stage of life
Having your own home means you can make all the adjustments, renovations and crazy paint jobs you like. Renting restricts your ability to make a house a home, but owning a home gives you complete freedom. If you are looking for more stability and looking to live somewhere for a longer period of time, then owning something is the way to go.
If you’re starting a family or your family is expanding, the desire for more space and a house you can truly call home and raise your kids in is one of the major factors that affects many people’s decision to buy a home. You want somewhere to hang photos, make memories and create a home.
The stability of your income
Having a stable, regular income is super important if you’re considering buying a house. For one, the bank won’t lend you anything unless you can prove you have a stable income, and you will want regular income anyway to ensure you can service the loan in the future.
When to buy
Never buy because someone tells you ‘now is the right time!’ or ‘the market is cooling off, get in now!’ Try to predict the market is as easy as trying to pick a winning number on a roulette table. Experts struggle to make accurate predictions, so your best bet is to buy as soon as you are in a position to do so. Getting in earlier is better than waiting for a ‘market dip’ which may never happen.
Your primary concern should be whether you’ll be able to make the mortgage repayments. Be realistic about your expenditure and lifestyle habits, and brainstorm where you can save money and how you might increase your income.
Remember that rent money will likely get you something nicer and bigger than the equivalent mortgage amount. But at the end of the day, you will own something yourself and won’t be paying off someone else’s mortgage.
Here are a few buyer profiles. Have a read and see if you fit into any of them.
Couple buying their first home
Young couples should focus on the location of their property, and the potential for capital growth instead of the size of the house and land. A small townhouse in a great location will out-perform a bigger house on a main street in the long term. If you get your first property right, you will experience some strong capital growth which will help you to buy the next property down the road.
The unattached millennial
Buying a house when you’re young might sound boring and responsible, but you’ll never have as much free time and unallocated cash again in your life. If you can buy something now before all of life’s responsibilities kick in, you’ll thank yourself in the future and have a solid foundation to buy more property, or upgrade when and if you decide to have a family. Your property will grow in value, and if you decide to move you can lease it and generate some rental income.
Retirees can find it hard to borrow money from the bank, but if you bought some houses during your working life, you should have a good amount of cash or equity to buy the property that suits your lifestyle.
This is your time to enjoy yourself so buy the best property you can afford. Also ensure it has all the necessities to make your life comfortable as you head into your golden years.
By Mark Ribarsky