Get a life…and a mortgage
Do you enjoy a good bottle of wine? How about that unmistakable new car smell, holidays or eating out?
Of course you do! We do too. In this article we’ll go through what you have to do to buy a home and still ENJOY all that life has to offer.
Understand all the costs
It may seem like common sense but the principal cost of the property is not all that you need to consider before buying. There are legal costs, inspections, reports… and that’s before you’ve even thought about moving in! Then you have removalists, repairs, maintenance, the list goes on. Take some time and work out how much this could cost you. Most of these costs can be added to your mortgage, you just need to know what you’re in for. Bear in mind that interest rates may rise so you don’t want to push yourself to the brink and hope for interest rates to ease or remain stable.
For once, Inflation is a good thing
For the vast majority of us, a mortgage is a marathon, not a sprint. When you’re in it for the long term, inflation is going to help you out, here’s how. A decade ago the average home loan was in the vicinity of $190,000, at the same time the Australian Bureau of Statistics shows the average income was just over $39,000. Last year the average wage was more than $74,000 so play that out over 10-20 years and your mortgage starts to look a lot more manageable.
Understand your end goal
Before jumping in, make a personal financial plan for yourself and the property. List all of the improvements you would like to make and the estimated costs, as well as other personal life expenses you would like or can foresee i.e. holidays, cars, your kid’s education etc. Then prioritise them according to your goals. Remember it’s just a plan, it doesn’t need to be perfect and it definitely shouldn’t be rigid. With a well laid plan, you should be able to roll with the punches.
If you want to understand what your repayments will be then think about locking in a fixed rate loan. At the time of writing, interest rates are pretty low so this could be an excellent option but just remember, in the next round of rate cuts or rises you’ll either be fist pumping or lamenting your decision… be prepared either way.
Applying for a new loan or refinancing an old one can be a great time to review ALL of your providers. Pull out your bills from the last quarter and start making some phone calls. There’s always a better deal out there for Credit cards, phone bills, insurance… it could be WELL worth your while to spend an afternoon firing off emails and making calls. Remember, to consider your credit rating as the guidelines changed in March 2014 – [Refer to our most recent Client Alert Blog – Protect your Reputation Manage your Credit Rating].
Do the math & know what you can claim
Understand all of the features and perks of your loan, there could be good deals with credit cards or offset accounts which could save you money on interest. Make sure you do the math all the way through though, as loans with offsets usually have higher interest rates, so just make sure the benefits outweigh the costs. Also, check with your local government before you dive in, there are often grants or other subsidies available. Once you’re all set up make sure you are leveraging the perks of your loans and your credit card loyalty programs to save money, and still enjoy all of life’s luxuries.