I remember the idea for Homeshelf came soon after we bought our first house. It was a really scary time for me. Constant thoughts of will we have enough to get through the month? But I promise you get through it. And the best advice I could give you is to go for it. Worst case you have to sell down the track. It's really is worth the initial worry to become a home owner. Here's 3 tips which helped us speed up the process when buying our first property.
SIX MONTHS HISTORY OF SAVINGS
Most banks will be looking for financial stability and job stability, so take some time to review your income and assets, as well as your existing debts and monthly expenses.
If you can show at least six months history of savings in your bank account this can reduce the LMI that's payable if you don't have a big deposit.
I find the Pocketbook App really easy and quick to use. You put in your bank details and whenever you pay for something on your card, which for me is for nearly everything, the app picks it up and categorises it based on what you teach it. For example, if you have coffees at a certain cafe every monday and a different cafe on wednesday you can teach it that those transactions are both a Cafe & coffee expense. Then it keeps track of each different category (Groceries, Petrol, Phone & Inernet Bills) so you can see what you are spending and set budgets yourself. This is not an endorsed plug, just good advice!
2. REDUCE YOUR CREDIT CARD LIMIT NOW
Banks still look at your credit card limit rather than the total you owe right now. So if you owe $200 on your credit card but have $4000 limit still on the card the bank will see that as a $4000 debt. Reduce your limit before you go to the bank for a loan. If you have a car loan or personal loans try to pay them off before you go to the bank too, or you can talk with your bank about rolling them into your home loan. That's what we did and it worked, we rolled our car loan into our new home loan. It doesn't increase your home loan by much but it means because you don't have debts to pay each month your borrowing power will be increased. The banks see it as the less debt you have, the more cash flow you have to put towards mortgage repayments.
3. THINK OF YOUR FIRST HOME AS YOUR FIRST INVESTMENT PROPERTY
You may not be able to afford your 'perfect home' price bracket straightaway, so think of your first purchase as your first investment property.
Try not to over-spend on upgrades! Only upgrade what will add re-sale value to your property or increase your rental yield for a few years time.