Buying your first, new home is a triumphant time in the life of a homeowner. In Australia, the average age of first-time buyers is rising (now at 34), but the challenges of saving and budgeting are still an omnipresent reality for most of us, no matter what age we are when we pull the trigger on our first home. Buying with a tight budget may seem like it’s off the table, but the truth is that with a solid financial plan, (and even without an overly liquid cash flow) anyone can take advantage of mortgage and collateral leveraging opportunities to get into that new home which they’ve been dreaming about.
Buying a home starts with a strong financial plan that’s years in the making.
Any buyer looking to seal the deal on a new home must first navigate a long road of sound financial decision-making, starting years before he or she arrives at the mortgage application. Lenders are interested in a variety of credit history-related factors, but one powerful advocate in your column is in your savings account. Particularly important is regular savings practices. An easy way to ensure that you are showing a steady savings habit is to simply schedule an automatic transfer from your checking account to your savings account, just after payday hits. This way, lenders will see a routine deposit into your savings account that occurs like clockwork and dates back far beyond your newfound interest in the property that you are hoping to secure with the bank-lent funding.
Show routine saving habits to project fiscal responsibility.
The total assets in your savings account matters too, of course, but the regular adjustment of your budget is the most important piece of this equation. Regular savings shows that you are living with the future in mind. Millions of people everywhere around the world are living from paycheque to paycheque, but setting aside a portion of your salary payments shows to lenders that you are serious about your finances, and aren’t relying on 100% of each month’s income to support your lifestyle and habits. In a purely mathematical formulation, you, as well as most of the general population, will spend more than you need to. Showing that you are smart with your money and take saving seriously, is a strong indicator that you also take your financial obligations as seriously, and will continue to set a responsible budget which takes your entire fiscal picture into account.
As a renter or homeowner, problems often come out of the left-field which requires immediate expenditures, like a call to your local White Hall roofing specialist when a leak occurs in your roof. These issues are but one emergency situation that may crop up in your home. Unexpected expenses plague us all the time, so the flexibility to field them quickly and without chaos is essential for first time home buyers looking to improve their eligibility and secure their first mortgage.
A commitment to responsibility when it comes to your home loan ensures that you will be equipped to field any problems that occur, while still paying down the debt on your mortgage.
Weigh the various mortgage options in front of you.
There are dozens of great options when it comes to choosing the type of loan you will buy your first home with. A traditional mortgage is accompanied by a complicated series of applications and credit checks carried out by your local bank. But no deposit home loans are another great option for those in a position of eligibility. This way, you can secure the entire sum for the purchase, and keep back all of the cash you had earmarked for the down payment. Homebuyers need to consider the loan terms, including the offered interest rate, loan amount, and life of the loan before accepting any offer made by a loan officer. Every borrower is different and so your situation may be best suited to one type of loan, while your neighbor chooses radically different terms based on their income ratio, envisioned renovations, and closing costs associated with the mortgage company who provided it.
Buying a home with a tight cash flow is entirely possible, but it starts with years of groundwork and a fundamental commitment to creating a habit of fiscal responsibility.