Year in and year out at the turn of calendar we make promises to ourselves that we’ll eat healthier, quit smoking, go to the gym, take up a new hobby, give up alcohol or start saving, but every year come February we’ve found that we’ve broken these goals and think to ourselves “I’ll give it a shot next year.” If this year your New Year’s resolution is to buy a new home, then here are our tips to keep you on track!
1. Identify your goal
What is it that you want to achieve? In order to be a goal rather than a dream, there are five key components:
- Specific – Saying “I want to buy a home” isn’t going to cut the mustard, you need to outline the key details around your goal of buying a home such as location, budget, size etc. and write it down. This will make it easy to understand
- Measurable – make sure you can measure how you are progressing with your goal; financial goals are easy as you can calculate the dollar figure you need to save week in and week out. You’ll know if you are off track if you’re not reaching your savings targets. Set little milestones for yourself when saving such as when your deposit reaches 1%, 5%, 10%, 15% or 20%.
- Attainable – is your goal realistic and within your means? For example, if it’s your first home you may realise compromises may have to be made to stay within your price point. Or if you’re starting saving from scratch and not disciplined, this may be a longer term goal. Goals need to be challenging but not unobtainable as this can be disheartening.
- Relevant – How will reaching this goal make you feel?
- Time Based – choose a reasonable timeframe, it sets a date that you need to act by and makes the plan more real. Set little reminders along the way to keep you on track.
2. Be ready to act
“You may delay but time will not” – procrastination to make a decision will mean that you will miss great opportunities. Research and have a laser focus on what you’re looking for in your next property. When deciding on the kind of property you want think about size, configuration, proximity to local amenities. If it’s a new investment property think about the goal of the investment - is it for capital growth or being used as a tax write off? Knowing what you want will enable you to act more quickly.
3. Set a realistic savings budget
Since the Royal Commission into the financial sector, lending criteria has tightened. Good money habits are very important if you’re planning to get a home loan this year. Lenders don’t just look at how much of a deposit you have, they assess your ability to save and make repayments.
To set a monthly savings target, you could start by making a budget or seeking the advice of a financial mentor or planner. It’s important that you are realistic and make a comprehensive list, so that you understand where your money is going and where you can cut back if necessary when you get a home loan. Setting a realistic goal that you are able to meet will help you feel a sense of accomplishment, even if it takes you longer to save.
4. Get your financing in place
We suggest you talk with us about getting pre-approval on your home loan before you start looking at properties you might like to buy. Establishing a price limit for your purchase is key.
This will help you to fully understand your financial position and help you to determine how much you can borrow and, as a result, what kind of property you can afford to buy. Setting a realistic savings budget first (as mentioned in point 2 above) is an important part of this process.
By doing this, it could save you hours of time looking at properties that aren’t in your price range but it will also ensure you're ready to act should you find the perfect property. Having a pre-approval assists in proving that you’re a serious buyer rather than a browser.
5. Get a professional team on your side
It’s not every day you buy a home, so working closely with experts that partake in real estate transactions every day will help make the process more streamlined and less stressful. Working with experts and people in the industry will also ensure that you’re getting the right information. Don’t be afraid to shop around or ask your local agent if they have any recommendations on solicitors/conveyancers, brokers and inspectors.
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