Buyers looking to take that first step on to the property ladder are being reminded to start the year on the right financial foot before making any big decisions.
Resolve Finance managing director Don Crellin said first-home buyers should ensure their finances were in order long before hunting for that new home and offered these tips to get started:
Pay yourself first
“Your first New Year’s resolution should be to open a specified savings account that you will put money into at least once a month; more often if you can,” he said.
“This is because a lender will want to see you have the capacity to save and can afford payments on a home loan.”
Mr Crellin advised those who found it difficult to save to make use of savings programs such as My Home Plan at www. myhomeplan.com.au.
Pay off debt
Mr Crellin said it was also important to reduce financial commitments such as credit cards, car loans or interest-free purchases as these can affect your ability to get a loan.
“It is important to know what interest rates you are paying on any loans and credit cards you may have,” he said.
“Then work to reduce those balances by paying those charging the highest rate of interest first if possible.
“And if you’re struggling to pay them all off, consider taking advantage of a balance transfer to a lower interest rate credit card or consolidating remaining balances into a personal loan, where you can enjoy a lower interest rate and work towards paying off the debt within a set period of time.”
Speak to a mortgage broker
First-home owners should also make an appointment to speak to a mortgage broker, Mr Crellin said.
“They become your new best friend and keep you focused on the first-home dream,” he said. “They’ll let youknow how much you can borrow and will shop around to find the right home loan for you based on your individual situation.
“Even if you’re self-employed or are looking to your parents for help with your loan, speaking with a professional will make the process much quicker and easier.”
Keep it real
“Lastly, add ‘keeping it real’ to your list of financial resolutions for 2016,” Mr Crellin said.
He reminded first-home buyers that breaking into the property market was a big deal and they might have to adjust their expectations a little.
“And make a pact with yourself that you won’t overlook all those important details, such as interest rates, income protection, your monthly budget, whether you want to fix your rate, what your replayments will be, and what kind of home loan will best fit your lifestyle,” he said.
Visit www.resolvefinance.com.au.
-Originally published in Stirling Times Residential
