What you both need to know before buying a property together
Buying a home on a double income, regardless of whether it's your first or not, has a few additional considerations you should be aware of.
While you're probably looking for a property with a good price and location, there are still many important aspects that need to be taken into consideration. This goes especially for young couples who would like to find a new home for themselves, as well as their future children.
You have to keep in mind that the area you choose and the house itself, its style, size and other characteristics will dictate whether you can live in it in the long term or not. It's very important to consider what you want not only today, but also what you'll need in the future.
What are your plans for today, tomorrow and the future?
The fact is that although you may have your eyes set on a particular type of house at this time, your needs change as your family grows.
This means you may need additional space both indoors and outside and may find certain amenities are more desirable, such as proximity to the beach, the city or other relatives with children.
All these things need to be taken into account before even planning on buying a new home, since without careful consideration, you might move out after a couple of years and find a new property.
Moving will bring with it the stress of putting a property on the market, paying agent fees and having to pay stamp duties and removal costs once a new property is found. It may also include the need to take out a new loan if your loan isn't portable, meaning you'll pay establishment costs and other fees once again.
Financing a new property purchase like this will also require a great deal of research and a careful account of your budget, credit rating and debts.
How do you financially prepare to buy a new house?
Preparing for a new home will require a great deal of planning and you'll also need to gather all the knowledge you can about what you can and cannot accomplish.
Important tips you should keep in mind when buying your new home
Ensure your credit file is the up to the task
A clean credit file will help you get access to the mortgage you want. Get a free copy of your credit file from a credit agency and go through each entry. Make sure each entry is correct, your personal information is current. Some entries can be updated and corrected if you find they're inaccurate. The process depends on the type of information. For example, if it's an entry regarding an overdue account which is incorrect, call the credit provider responsible for the entry and dispute it. If this isn't possible, call the credit agency and they may try to get into contact with them. The best way to keep your file clean is through prevention. An overdue account may be updated to show you paid it off, but will still remain on your file.
Get your debts in order
Your debts will be counted against any amount you try to borrow. For double income earners, a debt ratio higher than 40% of your monthly income, might see you rejected from some loans, so before applying for a loan try to get rid of all your other debts as soon as possible.
Work on your savings
Many new homeowners don't know about the importance of setting some money aside for unexpected expenses. Often the small things that may come with buying a home can add up to make your financial life more difficult. Apart from the sale price and deposit for your home, these can also include costs for furniture, taxes, utilities, moving arrangements and much more.
A good savings account will make managing your finances easier on a long term basis. Online banks are able to provide some good offers; however, try to get a savings account that allows for enough flexibility to suit your needs, even if it doesn't offer such a high interest rate.
An organised lifestyle will also help you manage your finances better. The savings 'bucket' approach is one way to do this. This simply involves setting up a separate high interest savings account for each of your savings goals and having your wage automatically pay a certain amount into these each time you're paid.
Finding your dream home
There are many ways to find a home. You can go down the professional route and enlist the services of a buyers agent or financial planner. They'll review your budget, inform you of the costs that you'll likely pay, as well as of the trends and offers that are currently available on the market.
You can also go down the buying route yourself. This will require a sound knowledge of the market you're looking to buy in, as well as a large amount of research. For more information consult the first home buyers guide.
Questions to ask yourself and to consider when finding a property:
Do you want a unit or house?
How close do you want your property to transport, schools and shopping?
What's the condition of the property you're after? Do you want something that you can renovate later, or a property that's new?
Have you had the property inspected for pests and it's structural condition assessed?
There are also some questions you should ask regarding your finances:
Have you gotten a rough idea of the upfront costs you'll pay, such as stamp duty, legal costs and insurance?
Are you eligible for the First Home Owner Grant?
Have you compared suitable loans available in the market and decided what type of loan I want?
As you can see, buying a home may not be a simple process, but it will definitely be a great adventure and bring you all the things you want in the long run. You may find that there can be many ups and downs along the way and things will not always seem to be going well, but the best advice is to keep your hopes up and trust that you will find what you are looking for.
So seek out the best guidance and make informed choices; you might be completely surprised at the positive results that you will get.