Can I Buy a House?

By Peter Sarmas on 18 Jul 2013
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How Much House Can I Afford

Source: Simonds Gallery

If you’ve been asking yourself the question “Am I ready to buy a house?” there are some important factors to consider.

Buying a house is one of the biggest purchases you will make in your lifetime, so you need to think carefully about your current situation and whether the decision to purchase a home is the right one for you.

Here are six points to consider when making your decision.

Am I Ready to Buy a House?

When considering buying a house, give some thought to whether you think you are up for taking that next step.

Think about your working life – do you have reliable, steady employment? Is there any likelihood of that changing in the near future? What is your backup plan if you were to lose your job?

Can you afford mortgage repayments in your budget on your current salary? Would you buy a house with a partner, friend or family member, or would you prefer to purchase a house on your own?

If you are not completely sure that you are ready to buy a home, give yourself some time. Evaluate your life and your financial situation, and set yourself goals to work towards to ensure that when the time comes you are in solid position to buy a home.

How Much House Can I Afford?

Taking a realistic look at your financial situation and ask yourself, “how much can I afford to spend?”

The costs of buying a house can equate to more than just the asking price. You’ll need to look into how much deposit is needed to buy a house, which is usually 10 per cent of the total price.

As well as this, you’ll need to account for several other costs, such as stamp duty paid to the Victorian Government’s State Revenue Office, legal and conveyancer fees, loan application costs, land title transfer fee and mortgage registration fee.

It’s best to find out how much you can afford to spend first, so make it a priority to seek pre-approval from your lender before you begin searching for your new home. Many people enquire about how to buy a house with no money down.

While this can be possible in some situations, in most cases having no deposit or savings to put towards your mortgage can preclude you or restrict the type of mortgages your lender will give you, which could potentially mean higher interest rates and paying more in the long run.

If possible, it is better to investigate how best to save for a house deposit, and work towards achieving a realistic goal. With a First Home Saver Account, the government will make a 17 per cent contribution on the first $6,000 you deposit each year.

Should I Buy a House Now?

When to buy a house is one of the most important questions to ask yourself when you’re considering purchasing a home. Timing is very important.

First, you need to consider whether your current financial situation will allow you to comfortably make the approximate repayments of the mortgage specified during pre-approval.

Buy when you can afford! If your finances will allow it, get into the market. Even if the house you can afford at this particular time isn’t your dream house, you made be able to trade at a later point in life.

Owning a home will result in forced savings, and will be more likely to build equity in your property than trying to save money over the same amount of time.

It is also a good idea to take a serious look at where you hope to be in five years. Do you see yourself in the same area as the one you plan to buy a home? Always buy for the long-term.

In Australia, the average time someone will spend in a house is ten years – an increase from the seven years it was a few years ago. It is generally not advisable to try to time the market when buying, but as a rule of thumb, you can usually work out what is a good time to buy through simple property market demand and supply.

If there is a high supply of houses available and a low demand, this is an obvious indicator of a buyer’s market.

Looking at clearance rates, auction numbers and auction attendees, open house numbers and the number of properties available in your area should tell you whether it is a good time to get into the property market.

Where to Buy a House?

Am I Ready to Buy a House

When considering buying a home, many people already have an idea in mind of the suburb in which they would like to purchase.

It is recommended that you do some thorough research on a wide range of locations before you make a decision on where to buy a house. Having already made a commitment in your own mind about where you plan to buy is likely to cloud your better judgment, and may result in you losing out on a very good deal.

Before you get set on where to buy a house, remember to look at homes and suburbs within your budget as stated during pre-approval from your lender.

While it is helpful to have a particular area in mind as a starting point, take the time to look at surrounding suburbs that may be more in line with what you are looking for.

You need to ask yourself, what’s important to you? Ideally you’ll want to buy somewhere that will fit in with your lifestyle or desired lifestyle, somewhere that is a distance you are comfortable to travel to work from, and of course, somewhere you like.

Maybe you want to live somewhere with a good selection of local restaurants and cafés, or maybe community activities or schools are more important to you. While your new home doesn’t need to be in your most desired suburb, choose somewhere you’ll be happy to live.

When searching for where to buy your next house, check out the Street News Suburb Profile, Community and Lifestyle sections for more local information.

What to Look For When Buying a House

What to Look For When Buying a House

Source: Simonds Gallery

When wondering what to look for when buying a house, there are several things to consider. It’s very easy to get lost in the appeal of a house, but does it really suit your needs? A smaller home may seem cozy during your inspection, but will you be comfortable in the long run with the size?

Before you buy a house, picture your furniture inside – will it be cramped? What could you get rid of, and what is important to you that you keep?

Separate what you need in a home from what you want for an idea of some other things to look at when buying a house.

For example, a luxurious bathroom with a big bath or an ultra modern kitchen with impressive appliances may seem appealing, but do you need these things? Do they fit into your budget? Could you find a better priced house without these extras?

Draw up a list of your wants and your needs, and work out what you are realistically willing to go without.

How to Inspect a House

 

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The importance of inspecting a house before you purchase is paramount.

There are several things to look for when inspecting a house and it can be very easy to get distracted in the process. You might even consider writing yourself a home inspection checklist.

Make a note to inspect all taps: is there good pressure? Does the water run clean? Dirty tap water could indicate that there is a problem.

Take a look at the hot water system. How old is it? Is it likely you’ll have to replace it soon? How much space is there? Will the house accommodate all your furniture and belongings?

What is the condition of the bathroom and the kitchen? Are there any sticky doors? Are there any rusty or blocked gutters? Does the house have heating and cooling? Are there any prominent cracks on the inside or outside walls of the house?

After the inspection, call up internet providers. Is service available at that location? Rate all of these things fairly out of five – ultimately it will help you to look realistically at the house and help you decide if it’s the property for you.

It’s important to remember not to forget the little things – ensure you have all the information about the house, which will then allow you to make an informed decision on what you are willing to compromise on and what you aren’t.

If you really don’t feel confident that you know how to inspect a home from a structural point of view, it can be a good idea to invest in the services of a certified building inspector before you buy a house – they will pick up things you might have missed, and will be able to tell you whether the house is structurally sound, and inform you of any work you may need to do to it in the near future.

The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should seek your own independent advice, having regard to the appropriateness, your objectives, financial situation and needs.

About the Author

Peter Sarmas is a Certified Property Investment Advisor (PIAA) and Vendor/Buyer Advocate. Before becoming the founder of Street News, Peter completed a Degree in Applied Science (Chemistry) and a Graduate Diploma in Property Valuations (Hons). Peter believes property investing is a major and potentially risky undertaking. In his view, everyone should have an independent person acting on their behalf when seeking property investment advice.

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