Statistics outline that one in five Australians feels compelled to purchase an imposing, big house, to keep up with the competition within their group of friends. That’s a reality pointed by a survey conducted by Finder.com.au.
According to the survey, one out of ten individuals constantly worries that he/she cannot keep up with friends’ living conditions, particularly when it comes to house ownership. On that account, we would like to encourage Aussies not to base their home purchasing plans on their friends’ financial position, unless they want to risk paying an enormous debt for many years to come. Don’t worry; this article isn’t meant as a lecture, but it’s supposed to be informative, particularly for first-time home buyers. Here are five things you should take into consideration:
1. Rely on a higher budget than the current interest rates
At the moment, interest rates are genuinely attractive. However, before considering a particular loan, specialists encourage Australians to calculate their home budget by adding almost 2 percent to it as compared to their current cash rate. That is helpful in guarding you in the case of unexpected growths in interest rate, which are due to emerge down the road – that’s absolutely inevitable.
2. Obtain an estimation of the amount of money you afford to borrow
A borrowing calculator plays an essential role in determining how much money you can afford to borrow. Typically, one should decide on a loan budget, anticipating the changes in income that may eventually emerge. Hence, the first step you should consider is a budget calculation. For starters, you should determine the part of your income that you could direct towards purchasing a property. And secondly, you need to calculate the required mortgage repayments for the amount of loan you pay on a regular basis.
3. Consider home loan market growth
The home loan market has experienced a noticeable growth in previous years. That is good news, particularly for first-time homeowners, but it may be a source of confusion as well. Therefore, remember to be patient, and take the time to compare distinctive home loan variables before signing a contract. Such an important decision as house purchasing requires time and plenty of information.
4. Economic factors
The future is filled with uncertainty, mainly because jobs aren’t as set in stone as they were in the past. It goes without saying that we cannot rely on the annual bonus or potential salary increase to pay for the loan debt. Alternatively, home loaners shouldn’t take into consideration these occasional bonuses as a foundation for their income.
5. Avoid taking the maximum loan amount
Even though the lender may present you with the alternative of borrowing a large sum of money, you shouldn’t proceed to take the amount available on the spot. Alternatively, focus your attention towards your current budget, what you can afford, and decide on a lower amount of money than the maximum available. Pay thorough attention to your repayment terms, as well.