Looking to buy in the new year? Here’s a list of tips to get you prepared, whether you’re a first home buyer, investor or a mature homeowner looking to downsize.
First Home Buyers
Plan your budget and stick to it
Work out your income and your expenditure, and be realistic. It’s important to know what you can achieve.
Clear your existing debt
Your home loan should be your top priority, and it won’t be if you’re still paying off that holiday to the Maldives from 2015.
Save the biggest deposit you can
Not only will a big deposit lower the amount of interest you’ll pay on your home loan, it also gives you immediate equity and sends the right message to lenders.
Research your entitlements
Look into First Home Owner Grants, Stamp Duty savings and any other breaks you may be eligible for – you could save thousands.
Do your homework
What homes are selling, what’s renting well, and where? Finding the right property in the right suburb is the most important thing for future success.
Buy for the right reasons
Perhaps you’re thinking of buying a house that risks making a loss for the first few years, and writing it off with negative gearing. Property investment is about making capital gains – it’s a medium to long-term commitment, not a short-term tax break.
Consider using equity in your current property
Allocating some of this wealth could allow you to borrow more for your investment and will increase tax deductions.
Think about the National Rental Affordability Scheme
Buying a property that’s attached to this government scheme could allow you to claim financial incentives. There's very few NRAS properties left in Perth, so you'll have to go on a hunt to find one, but it's certainly worth looking into.
Get your current home valued
Working out what your home is worth now will help you set a budget for your new one. Be sure to get several valuations and pick the most sensible one – not necessarily the highest. And don’t forget to factor in legal costs, taxes and so on when arriving at a final figure you want to spend.
When you know how big your new home will be, decide what you can realistically take with you. Be ruthless, but take your time – if you don’t love it or absolutely need it, sell it, give it to family or donate it.
Plan for the profits
What will you do with the money you make from downsizing? Perhaps think about reinvesting in new property, with a big deposit to slash the mortgage payments. After you’ve had that well-deserved round the world trip, of course.