Purchasing your first-ever house is such an exciting prospect, isn’t it? There are so many things you need to take care of- the floor plans, raw materials for construction, painting, and innumerable other things. All of this requires a proper budget plan.
Without constructing a budget, you’ll definitely be at a loss. In IMF’s Global Index, about 23 out of the 60 countries registered saw a hike of more than 5% of the houses’ construction prices.
Even though purchasing a house can be very costly at times, here are a few tips for proper budgeting to make things easier.
- Save up money for a house deposit
The first and most important thing is to understand your budget properly. Make a budget according to the expenses you can afford. Keep saving up the money in a deposit. Then do some house price research.
When you keep searching online and comparing prices, you get a much better idea of the prices in the market. A great savings goal is to save up at least 20% of the price of the house. Plus you should also have enough money to cover the purchasing cost.
- Check the amount you need to borrow
The kind of money you’ll need to borrow from banks or other organizations depends on various factors.
For example, your income and financial commitments, the amount needed for house deposits and other savings, and your bank credit score. Be realistic when it comes to borrowing money. If the rates of interest increase, your repayments can get tricky.
If you need great home loans at low-interest rates, the https://www.greatsouthernbank.com.au/ is your one-stop solution. It is Australia’s largest customer-owned bank and offers very affordable services to its customers.
- Compare home loan rates
Get in touch with at least two different lenders to get personalized home loans. A rate that is lesser than 0.5% can save you from spending thousands of dollars unnecessarily. Since there might be many lenders in your area, you can contact a mortgage broker to get more loan options.
Try to get the loan pre-approved from the lender. They might ask you for your current financial situation and income in order to approve your loan. The process of pre-approving the loan can vary between 3 to 6 months, after which you will be able to get a loan up to a certain amount.
- Find a suitable house
Don’t try looking for houses that are beyond your budget. Find a proper balance between a house that suits your budget but is also comfortable.
Decide on the must-haves (electricity, transportation, water supply, schools, or offices) and the nice-to-haves (designer fittings, outdoor space, and an attic or basement). Make your budget according to the must-haves since they are more important in any house.
- Stick to the price range
If you have been pre-approved for a loan of, say, $500,000 don’t look for properties that sell for more than that. Always stick to the budget that you have made to avoid spending large amounts of money.
Buy a property that is within your price limit, even if it means a slightly less-than-ideal location or facilities. You can do your research by looking it up online on Google or by asking your friends and relatives.
- Negotiate
This might sound a little awkward, but negotiation can also help you cut down a lot of costs. Try to negotiate with the contractors or builders to slightly lessen the price of the raw materials.
This way, you will have some money kept aside in case of emergencies or unforeseen situations while purchasing your house.
In order to get a clearer idea before buying your first home, you can attend a few auctions to see the price range. Consider hiring a buyer advocate to make things easier.
- Settling costs
Simply making a budget for purchasing your first home isn’t enough.
You need to prepare a budget for the settlement date (the date from when your mortgage officially begins), stamp duty taxes, and home insurance. Make sure you have enough money to cover these expenses too.
Over to you…
Preparing a budget for buying a house, especially for the first time, can be a scary task. There are a lot of factors to take care of, but once you make a plan, the entire process becomes a lot easier.
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