Being young and trying to get your stake in the Australian property market isn’t easy these days. We often are still working our way up in our professional careers, battling the increasing cost of living and having to deal with the social pressures of a “buy now worry about cost tomorrow” mentality.
When you take in the fact that barely standing shacks are being sold in Sydney for millions of dollars and the average price for a ‘starter’ home keeps climbing year after year. It can often be a bleak place for buyer’s especially first home buyers.
While the process can be challenging, and at times, seem unachievable, the decision to purchase your first home is one that will set you up for the future. The important thing to remember is that it is achievable, you don’t have to navigate the unchartered territory on your own.
The good news is there is plenty of Gen Y first home buyers entering into the market that I deal with on a daily basis, I wanted to share some of the tips that seem to really work for them.
- What’s your why?
Before anything else you need to sit down and work out why buying a property is so important to you. Are you buying a home or investment? What will be this property allow you to do? How will it make you feel by buying that first home?
For first time buyer’s the process can be foreign and can become difficult and deflating that you might get knocked off course, for example if you miss out on the home you wanted at auction. Having a strong why and being able to go back to that is what’s going to help you push through those barriers and purchase that home.
- Invest in yourself
The best place to start is to take some time to learn a little bit of what’s involved in the buying process. Reading a good book, attending a workshop or seminar is always highly recommended. Asking questions and speaking to professionals in the industry is another good way.
While you don’t need to be an expert it’s a good idea to grasp the concept because the last thing you want is to make a costly mistake like getting taken for a ride by the sales agent and overpaying for that new property purchase.
- Get your finances in order
Buying a property requires borrowing money from a bank, so it’s important to have your finances in order. You need a minimum of 5% deposit (plus purchase costs) to purchase a property, so work towards that as a starting point. If you have any existing debts such as credit cards, look to reduce them as quickly as possible. Speak to a mortgage professional to work out how much you can borrow and get a pre-approval from the bank before even looking at property.
- Start small
I always find first home buyers are often looking to borrow the maximum they can from the bank to buy their first property. Whether you are buying a home or investment to borrow your maximum on the first purchase can leave you overexposed. By starting smaller, allows you to get into the market quicker as there is less outlay required.
It’s so important for first home buyers to start off with a manageable debt, the last thing you want is to buy your first property and end up with sleepless night stressing on how to repay the mortgage. Also starting with a smaller first purchase any first timer mistakes becomes less risky and expensive.
- Get professional help
With so many things to consider, getting professional help is highly recommended. There are many experts in the industry and it is in your best interest to use them for tasks such as property checks, pest checks and any other legal queries. Avoid nasty surprises down the track by getting the right people to do the appropriate checks for you from the beginning.
- Be good to your parents
With property prices always seeming to be sky rocketing and it getting harder and harder to save for the deposit, I am seeing more and more first time buyer’s using their parents or close relatives to help them get into the market. There are a few different ways they can help out but the most common way is using a family pledge loan. This is simply using some of the equity in your parent’s home to help fund the deposit for your first property purchase. About 1 in 3 of my first home buyers are utilising this resource that is available to them. By using a family pledge loan, you are able to potentially get into the market today rather than needing to save a deposit, avoid the costly Lenders Mortgage Insurance premium and allow you to borrow more.
When purchasing your first property, don’t let yourself be overwhelmed by the experience. The process can be seamless and enjoyable when you tackle it in individual stages. From making the decision to purchase, to finding the right loan, saving for your deposit and finding and securing the perfect home.
Step-by-step you can achieve your financial goals.