Home buying is one of the biggest purchases you’ll make in your life time. But the cost of buying the house you’re interested in is not the only expense that you’ll need to consider. Home buying comes with many hidden costs. This is why it’s important to buy with your head and not your heart. This will allow you to avoid costly mistakes.
Ask yourself these 5 questions before buying and you’ll be prepared financially and know what you’re seeking to purchase:
1. How much can I borrow?
Calculate how much you can borrow before you start looking at property. Make sure you think about rising interest rates and buy well within your budget. This will reduce your financial stress if, and when, interest rates rise at a later date.
2. Do I need to check my finances?
Make sure your finances are stable before you buy a home. You’ll need a secure job, to resolve any financial issues you have and to consider your existing expenses. If you have credit cards, pay-off any debt and reduce the credit limits as this will increase your borrowing power.
3. How long will I live in the property for?
Before you buy, consider how long you’ll reside in the property for. To make good capital gains with property and to make the purchase viable you’ll need to hold onto the property for a minimum of 5-years. This will allow you to recoup the cost of stamp duty and other fees, as well as charges, such as mortgage title transfer costs and legal fees.
4. Where should I buy a home to?
Always buy in an area that is attractive to a buyer. Look for a home close to schools, transport, amenities and shopping centres. Consider street appeal and look for tell tale signs that a property is in a less than favourable area, such as graffiti, poorly maintained properties, yards and roads, and wheel marks in the streets.
5. What are the costs of stamp duty and other fees?
Before buying a home calculate the costs of the purchase. Stamp duty and the transfer of the mortgage title can add thousands to the cost of a home. Calculating these costs prior to buying will save you the shock of having to budget for the additional expense. For instance, stamp duty on a $350,000 house can cost you up to $16,349 depending on the state you resided in.
Do you want to know more about your borrowing power? Then contact eChoice and find out how much you can borrow today.