When buying a property having the right tools to maintain your finances is essential.
In this article, guest poster Jerry Tyrrell who had has over 40 years’ experience in the building, architectural and timber pest industry and is the founder of Tyrrells Property Inspections, look at the key essentials you need to know to ensure your finances are under control.
Buying a property is one of the biggest and most expensive purchases that most people will ever make.
To the uninitiated, the transaction seems like a labyrinth of unfamiliar legal jargon and financial risks.
But although the path to home ownership is paved with perils and challenges, you can side step the pitfalls if you tread with caution.
The following five tips will help you keep your finances afloat when buying property.
1. A Good Beginning Makes A Half Battle Won
The quest for the ultimate dream home sometimes comes with unexpected issues and complications.
The home that looks or ‘feels’ right isn’t always as perfect as it seems.
Before you put your money where your mouth is, arrange a building inspection to uncover any potential problems and ensure that you know exactly what you are committing to.
A qualified building inspector can see through any cosmetic improvements that might be concealing faults that an untrained eye would otherwise overlook.
The inspection report helps you to make an informed purchasing decision and avoid expensive mistakes.
2. Cut Back On Credit
There’s no doubt about it – credit cards are convenient.
But once you’re lumped with a hefty mortgage you’ll start to really feel the burden of credit card repayments.
Before you apply for home finance, pay down your credit cards and reduce your credit limits.
Credit cards are one of the first things that lenders will consider when assessing your borrowing power.
Your credit limit can make a big difference to the amount you can borrow for your property.
Even if you don’t use your cards, your available credit limit will affect how much finance lenders are willing to approve.
So keep your limits as low as possible and cancel any unused credit cards.
3. Consolidate Your Personal Debt
Once you start repaying your mortgage, your monthly budget will start to look like a leaky boat.
So before you set sail into the uncharted waters of home ownership, plug some of the old holes in your budget.
Seek out opportunities to consolidate any personal loans and department store cards that have higher interest rates.
High rates cost you more and impact on your borrowing capacity. By streamlining your debts, you’ll find it easier to focus on your mortgage repayments and balance your finances.
If you’re torn between buying an old home versus a new one, the First Home Owners Grant might help you make your final decision.
The FHOG is a national scheme funded by the states and territories and administered under their own legislation.
Under the scheme, a one-off grant is payable to first homeowners who satisfy specified eligibility criteria.
The cost of buying a home is not a straightforward one-time outlay.
There are lots of additional expenses that you must factor into your budget – everything from renovations and furnishings to conveyancing fees.
The FHOG alleviates the financial pressure of those peripheral expenses.
5. Set Up A Redraw Facility
Once you decide on a property and are ready to negotiate your finance, put measures in place to protect your cash flow in the future.
Set up a cash reserve, via a line of credit or redraw facility, to safeguard against tough financial times down the track.
From one day to the next, you never know what might happen.
Life can throw all sorts of financial challenges at us: illness, job loss, family tragedy or natural disaster.
If you have a buffer in place, you can face the future with peace of mind.