It’s a special kind of feeling when you realize you can now buy a house to call your own. You’ve stepped up from having to pay rent to have your very own humble abode.
Having said that, there must be a ton of questions racing through your mind right now. That’s totally fine and understandable. When it comes to buying a house you’ll have to weigh the pros and cons and really commit to it.
So, if you’re uncertain of what to do and how to begin, you’ve come to the right place. Today, we’ll tell you about the 6 facts to keep in mind while buying a house.
Let’s get right to it!
Plan a Budget
The first and foremost thing you’ll need to do is to plan a budget. You’ll keep a track of how much money is left to pay for your mortgage, also how much of it is going out and how much is coming in.
To make it sound simple, having a budget will show you where and how you’re spending your money and also helps to figure out the areas from where you can save money as well.
Having a plan is always a good idea and having a budget is the wise move to make before you buy a house.
What it’s Really Going to Cost
To get into the nitty-gritty details, buying a house comes with a lot of other costs, sometimes they are upfront and many times ongoing. Transfer or stamp duty is probably the biggest of these costs.
When you’re setting your purchase limit, always remember to make provision for additional expenses. Loan establishment fees, removalists, and conveyancing are some of the upfront costs you’ll have to deal with.
Whether you’re buying an apartment or a unit, body corporate fees need to be paid. Some other ongoing costs which have to be included in your budget are insurance premiums and council rates.
You can also check out other details online about first home buyer grants in your area. There are chances that stamp duty concessions might also be available.
You can seriously save thousands of dollars by combining these initiatives.
Deposits and Savings Record
Even though some lenders will be willing to loan you almost 80-90% of the value of your to-be-home, you’ll still have to come up with the odd 10 or 20% of the purchase price plus the upfront costs.
If possible do a quick review of your deposit and budget to see how much you can save. Set some savings goals and record how you plan on achieving them.
Making Good With the Lenders – Lenders will ask to see your bank account and credit card statements. They will look for a good savings history and how responsibly you’ve used your debts.
They will reject customers who have poor credit ratings or bad and reckless spending history. If you want your lender to be impressed by you, then aim for having a good savings history!
Cancel any avoidable credit cards and also consider cutting spending on your other cards as well. Your lender will include your credit card limits when you are applying for a mortgage.
They will not include the actual balances, so clear away any current debts you might have ASAP.
Get to Know About Mortgages and Interest Rates
If you’re unfamiliar with how mortgages and interest rates work, then we suggest you get started on them right away.
Try to gather as much information as you can get from lenders. Get the details of all the fees that need to be applied which includes early repayment charges. That’s right. You can even be charged if you pay your mortgage early.
If, for some reason, your loan comes with features you’re unfamiliar with, then make sure you do some research on it or any other potential costs. Compare and understand their limitations and rates as well.
Besides the purchase price of the house, the other thing you’ll need to worry about is the interest rates. If you’re not careful or have any idea about interest rates, it will be better to get yourself educated!
Variable or Fixed Loan
There will be times where your lender might offer you to fix the interest rate on at least some part of your loan. A fixed-rate signifies an advantage for you if the interest rates rise.
However, if they fall, you’ll have to pay more interest than you might have hoped for a variable rate on the entire loan. Figure out the option of splitting your loan between fixed and variable rates.
Interest rates rise when the economy of a country is strong. This means that not only the inflation rate is increasing but unemployment levels are low as well.
Even though it’s not possible to foresee the future (yet), the interest rate will decrease when the economy is bad. You will end up facing significant fees on early repayment of the fixed constituent of your mortgage.
Reducing Interest Payments
Finally, to help reduce your total interest bill, your interest will be calculated on your outstanding loan balance.
Many loans will offer a linked 100% offset account. When the interest will be calculated, the balance in your offset account will be subtracted from your outstanding loan amount.
If your financial circumstances change and you have the option, try to increase your mortgage repayments in order to pay off the loan quicker or sooner. Or you could go for the fortnightly or weekly repayments instead of paying them monthly.
Final Thoughts
In conclusion, buying a house isn’t easy and it takes a lot of planning to get it right. It’s one of the biggest financial steps you’ll ever take in your entire life, so be prepared to face all sorts of obstacles throughout the journey.
Once you go through all the hassle and finally set foot inside your own home, you’ll think back and realize it was all worth it. So, we hope our tips help you to get your head in the game and be thorough about everything.
