Money-tips

5 Tips For First Home Buyers

You’re ready to buy your first home, but are you making a smart decision, or buying your dream home just to impress your friends?

Jeremy Cabral, publisher of Australia’s leading home loan comparison website Finder.com.au, says, “Purchasing your first home is an exciting time and it’s easy to get distracted by other people’s opinions or feel pressured to purchase a place that will impress others or make them envious of you.

“The reality though is that first home buyers need to consider the cost of keeping up with the Joneses and whether they can afford the repayments on a bigger property in a more highly desirable area. Rushing into a decision like this can end up costing first home buyers gravely down the track.

“First home buyers are always tempted to buy their dream home first. When actually, they should consider something more in line with their current budget to get them on the first rung of the property ladder and then buy bigger once the equity on the place builds up,” he says.

Mr. Cabral says first home buyers should be aware of the following crucial factors before signing up to a home loan that may be out of their budget:

1. Budget higher than the official interest rates

Although interest rates are currently at a remarkable low in Australia, variable rate home owners are encouraged to calculate the budget for their home loan 2% higher than the actual cash rate. This will safeguard them against unexpected interest rate changes that will occur down the track.

2. Economic factors

The economy is uncertain now more than ever and jobs are not as secure as they used to be. We can no longer simply rely on the annual bonus or pay increase to cover home loan debt.

First home buyers should not factor in bonuses or expected increases to their salary when calculating their home loan budget.

3. Get an estimate of how much you can borrow

Historically couples relied on the sole earner to pay the mortgage. Those days are long gone it would seem as couples now rely heavily on both incomes to cover the home loan payments.

A borrowing power calculator is essential to ascertain how much first home buyers can borrow. Couples should base their home loan budget on one or at most 1.5 incomes to allow for any changes to their income that may occur.

The first step first home buyers should take before selecting their desired home is to calculate their budget. Finder.com.au has launched calculators to simplify this process for consumers:

1. First, they need to calculate how much of their income they can spend on a property. Use this home loan calculator. 2. Then they need to calculate the mortgage repayments required for the loan amount and what they would have to pay each month Try this mortgage repayment calculator.

4. Don’t take the maximum loan amount

Regardless of whether the lender offers the maximum amount, buyers should be steered by their budget and borrow less than what is offered. Consider your repayment terms rather than seeking approval for the maximum home loan.

5. Home loan market growth

The home loan market has grown considerably in the last number of years. This spells good news for first home owners but can seem confusing. It’s important to take your time, compare all the home loan options available to you before signing on the dotted line.

What is your best tip for first home buyers?

July 11, 2013

Spring Clean Your Finances

It is good practice to give your finances an annual ‘clean out’. Not only with you get things in order, you may be able to take advantage of new deals and save month at the same time. Here’s a few steps to follow:

    1. Get a better deal. If paying off your credit card debt is more of a priority than reward points, switch to a low interest rate car.

 

  1. Spot check your savings and investments. Collect statements from all of your savings and investment accounts and check them against last years to see how much they have changed. Then review them against your goals to see if they are still appropriate to your goals.
  2. Put some order into your money paperwork. If you haven’t already done so go out and buy a portable file or some folders and put all your bills, bank statements etc in an ordered filing system. It will take a bit of getting used to but once you get into the habit you won’t know how you survived beforehand.
  3. Monitor your mortgage. Run your eye down all of your statements and see if all payments etc are being put into your account properly. While you are there check out how many years you have to go before you pay off the loan. It may also pay to have a chat to a mortgage expert to see id there are nay better deals at that time as well.
  4. Check up on your health insurance. Compare your fund with the others in the marker and if you can find a cheaper alternative (for the same cover as you have now) and take it.
  5. Clean up your home insurance. Check to see if all your insurances are paid up and cover everything you think they cover you for.
  6. Ring up about a new phone deal. Don’t get mad at your phone bills – look for a better deal. Now with number portability in place there are great deals on offer so if you sport a cheaper deal take it.
  7. Get an update on your superannuation. With a great deal of activity happening in the superannuation industry it is a good idea to run your eye over your super statements. Make sure your current superannuation account includes the amounts from your previous jobs super policies.
  8. Re-check your goals. Things change and so do your needs and wants which therefore affect your goals. During your spring clean make it a special point to re-check your goals and if need be change them.

From Unlock the Secrets of your Money Personality by Greg Smith.

Unlock the Secrets of your Money Personality is a kick-up-the-bum for anyone who knows they should be sorting out their finances, but does know where to start. Through identifying your existing money habits and suggesting strategies for increasing savings through budgeting, investing and most importantly, learning about money, Unlock the Secrets of your Money Personality can transform you into a knowledgeable, money-savvy chick well on her way to financial independence and security.

September 17, 2002

How to Make the Most of Your Money?

Spend wisely, save steadily and manage your money like a mogul! Find out more top tips for making the most of singledom, in Sue?s great book Get On With It.You have a good relationship with your bank account if you:

  • Regularly transfer money into a locked savings account.

 

  • Distribute your money to your needs first, and your wants second.

 

  • Plan and budget in advance when you want to make purchases.

 

 

  • Address money drains as soon as they become apparent ? e.g. unreliable car, huge mobile phone bills, excessive clothes

You may need a financial overhaul if you:

  • Regularly spend more than $50 on drinks in one night.

 

  • Find that you?re always counting down to payday.

 

  • Make more than one or two impulse purchases a week.

 

  • Make expensive purchases when you know you can?t afford them.

 

  • Plan and budget in advance when you want to make purchases.

 

  • Spend over $10 a day on lunches.

 

  • Find you buy a lot of stuff you don?t use

 

  • Rely on your credit card as a source of cash flow

 

  • Shop till you drop every payday.

from Get On With It the sassy new book for independent single women by Sue Ostler (Allen & Unwin). Learn to love your own life, develop your career, take control of your finances and enjoy everything you want!

Buy a copy of this book from the SheSaid BookShop.

 

July 16, 2002

Solution to 5 Common Money Crisis

We solve your biggest cash dilemmas!

Your next money crisis – solved!

Don’t turn a money drama into a crisis! We all have enough money concerns without extra problems, right? Here’s how to minimalise the damage and keep your stress levels down, in case one of these common money issues occurs in your life.

“My credit card was rejected!”

Calmly offer another card, a cheque, or to pay cash. Once home, call your card issuer to find out how far you’ve exceeded your spending limit and request a higher limit if you think you need one. If you have a good credit record, many will do this on the spot. To prevent such an embarrassing problem (it has happened to most of us at some time!) happening again, keep a running tally of all your charges on a piece of paper in your wallet.

“A friend won’t/can’t repay the money he/she owes me!”

Propose a payment schedule in which they deliver the money in small instalments. If they still won’t pay, have a letter drafted by a lawyer, which will probably shake them into action. If they ignore it, follow through on your threats of legal action – who needs friends like that anyway.

“I lost my wallet/handbag in a foreign country.”

Were you robbed? If so report the crime and get a police report; you may need it later to recoup losses. If your wallet contained an American Express Card or Travellers Cheques, call Amex immediately, or visit one of its offices. If you also lost your passport, police stations in most countries will provide a letter authorising your departure from the country. If you can’t communicate with them, or can’t find a police station – and you also – head for the nearest English-speaking Embassy. If you lose your air tickets, call the airline and report it immediately and ask to collect reissued tickets or travel on electronic tickets.

“I crashed my car!”

If your car sustained major damage, or if another car was involved, call your insurance company immediately to file a claim. If it looks as though the damage to either car will cost over $5000, you must call the police to the scene. Also stop other drivers or pedestrians who may have witnessed the accident – especially if it wasn’t your fault – and take their details. If a car hits you and doesn’t stop, try to catch sight of their number -plate. Keep quiet, however, about a minor accident involving repairs that don’t wildly exceed your no-claim bonus. You’re better off paying the bill yourself.

“I can’t make a loan repayment!”

If you missed this month’s due date but you’ll have the money within the next 30 days, just call to tell the company to whom you owe the money and request an extension. You may be charged a late fee, but one late payment won’t do major damage to your credit rating. Have a long, tough financial period coming up? Call the lender, explain your situation and ask for more lenient repayment terms. They’ll often agree to collect less now to prevent default later.

July 1, 2001