Purchasing a new home tips
Scott Pape the barefoot investor has some useful tips for first home buyers.
Two incomes can quickly become one.
This is especially true in the boom and bust cycle of the Gold Coast.
So rather than Location Location Location Scott suggests Safety Safety Safety.
Home Ownership In Australia
How much deposit do you need?
20% Deposit and factor in a 1% increase in interest rates.
Which account to use to save for a deposit
He suggests a First Home Saver Account – the catch is you need to keep the funds there for 4 financial years. 17% pa plus government guaranteed is a great deal.
If you have the discipline to do this you are well on the way.
Notice at this stage he hasn’t even mentioned what house to buy – which is often where many people start.
When is the right time to buy?
1. when you have the 20% deposit
2. find a home you really love and you can afford
Lenders Mortgage Insurance
Loan to Value Ratio is the amount of the loan divided by the purchase price (or appraised value) of the property. This figure is used to access whether Mortgage Insurance is required.
“If your LVR is higher than 80%, you will usually need to pay lender’s mortgage insurance, and the lender could charge you a higher interest rate. Avoid these extra costs by saving a bigger deposit to lower your LVR”.
Buying a home is the biggest financial decision you are ever going to make and it can either be the best one or a nightmare.
Avoid trying to pick the market because you can’t – focus on what is happening with yourselves.
Remember mortgage brokers and real estate agents will try to encourage you into the sale – but they are not going to be there in 20 years when you have to pay everything off.