Buying your first place will no doubt have you jumping for joy. You’re now a home-owner, and you’ve signed your last lease, and said goodbye to share-house drama for good.
Once all your furniture is moved in though, and you’re looking over your bank statement with a cup of tea, the realisation that you’ve entered what will probably be your biggest financial commitment may start to sink in.
Firstly – don’t panic. You’re far from being alone. Most first-time buyers won’t have entered into their first mortgage with an excessively huge deposit, so seeing a number with so many commas on your loan statement is normal. Keep calm and follow these simple tips to balance your budget while paying off your home loan.
Only borrow what you can afford
The great thing is, it’s easier than ever to look into your financial future and determine what size home loan you’re going to be able to manage.
- Get your budget in order – do a quick but concise stock-take of your current financial situation, trying hard to account for every dollar in your pay-packet.
- Narrow your property search – Determine what you’re looking for in your first home. Consider suburb, size requirements, facilities, etc in this process. Once you’ve got a mental picture of the house you’re after, do some research to find out how much similar homes are currently selling for. This will give you a ball-park on price, which you can then use to see how much you’ll actually be able to borrow.
- Calculate your repayments – Once you know the loan size you’ll need to buy your place, figure out how much the ongoing repayments will be using an online calculator, and then align this with your budget. If the numbers add up, you’re on your way. If it doesn’t look like you’ll be able to service the loan, you may need to re-think your strategy.
Check in regularly
After you get your keys and move in, you need to be prepared for a significant change to your finances for the first 12-24 months of your loan term.
Keeping a close eye on your spending habits is advisable. If you’ve done your homework there should be no need to resort to an instant noodle diet and hitch-hiking to work, but being as careful as you can when drawing up your monthly budget will help avoid any nasty surprises.
Now that you’re servicing a home loan as well as making regular financial payments associated with home ownership like power bills and rates, pinch every penny!
Beware of temptation
Now that you’ve got your new place, of course you’ll want to adorn it with the best of everything! New flat screen? Sure! Outdoor setting? Go for it!
My advice? There’s no rush. If you’ve spotted something you like, don’t spend money you don’t have in order to get it. Set yourself a savings goal , open yourself a savings account and incorporate contributions towards your goal into your monthly budget.
Keep in touch
If you find yourself struggling to stay afloat when bills start rolling in, or if you encounter unexpected expenses, speak up early.
The sooner you get in touch with your bank, the wider your range of options. Greater customers are advised to contact their lender if they are experiencing financial hardship or mortgage concerns.