Whether you’re hunting for your first home, in the market for an investment unit, or helping your kids out with a place of their own, buying property is always a big financial decision — so plan it carefully before jumping in.
And with real estate prices soaring across Australia and the median house now valued at over $700,000 nationally,4 you need to work out exactly how much you can afford to spend, long before you start picking out wallpaper.
The last thing you want is to be faced with is mortgage stress for decades to come. That’s why it’s important to think carefully from the outset about how your mortgage repayment plan will fit into your overall financial strategy.
Next, you’ll need to save for a deposit, as most lenders expect you to pay 20% of a property’s value upfront. If you can’t afford that much, you might have to pay for lenders mortgage insurance as well, which can add thousands of dollars to the cost of your loan.
You’ll also want to consider which type of home loan is best for your financial situation —for example, a fixed or variable interest rate loan. Choosing a fixed interest rate can make it easier to budget your repayments, but it also means you won’t reap the benefits if interest rates drop.
4 Domain Group, Domain house pricing report, June 2015
Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.
Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.
This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.