5 Things To Do Now To Prepare You To Buy Your First Home In The Future
Are you dreaming of owning your own home one day? Now is the time to take action and start preparing for the future. Buying a home is a big decision and it can take a lot of dedication and hard work to make it happen. In this blog post, we'll be looking at 5 things you can do now to put yourself in the best possible position to buy your first home in the future. From understanding your budget to researching potential locations, we'll cover the key steps you need to take to make your dream of home ownership a reality. So let's get started!
Establish Good Credit History
When you are preparing to buy your first home in the future, one of the most important things you can do is establish a good credit history. Having a good credit history is essential for getting a loan approved since lenders use it to evaluate your creditworthiness.
The best way to establish a good credit history is to make sure all your bills are paid on time. Even if you don't have any credit cards or loans, making sure you pay all your bills on time will help you build a good credit history. If you have credit cards or loans, paying them off in full and on time will also help you establish a good credit history.
It's also important to check your credit report regularly. This will help you ensure that all the information is accurate and up to date. You can get a free copy of your credit report from each of the credit reporting bureaus in Australia.
Finally, it's a good idea to reduce the amount of debt you have. Having too much debt can make it difficult to get approved for a loan, so it's important to try and pay off as much debt as possible.
Overall, establishing a good credit history is one of the most important steps you can take when preparing to buy your first home in the future. Make sure to pay all your bills on time, check your credit report regularly, and reduce the amount of debt you have. Doing all these things will help you build a good credit history and make it easier to get a loan approved when you are ready to buy your first home.
Get Pre-Approved for a Mortgage
Getting pre-approved for a mortgage is a great first step to take if you’re planning on buying a home in the future. Pre-approval means that, if you're eligible, a lender will give you a conditional commitment in writing for a certain loan amount, valid for a certain period of time.
Pre-approval is a great way to make sure you know how much you can borrow and what your loan repayments will be before you start looking for a property. It also helps you when making an offer on a property, as sellers are more likely to accept an offer from a buyer that already has a pre-approval.
When thinking about pre-approval, it's important to consider the type of loan you’re looking for. Different loan types have different features and benefits, and it’s important to find the one that best suits your needs. There are both fixed and variable loans available, and depending on your situation you may want to consider a loan with an offset account, or a loan with a redraw facility.
In Australia, lenders will generally require that you have a minimum deposit of 5% of the purchase price of the property. This deposit can be made up of cash, equity, or a combination of both. It’s important to have a good savings plan in place to ensure you’re able to meet the deposit requirement.
When applying for pre-approval, it’s important to have all your documents ready, such as proof of income, proof of identity, and recent bank statements. It’s also important to make sure you’re open and honest with a lender about your financial situation so they can give you the best advice and ensure you’re getting a loan that’s suitable for you.
Getting pre-approved for a mortgage is a great first step to take if you’re planning on buying a home in the future. It gives you peace of mind knowing how much you can borrow, and it puts you in a good position to make an offer on a property when you’re ready to buy. Make sure you consider all the loan options available to you, have your documents ready, and have a good savings plan in place to meet the deposit requirements.
Save for a Down Payment and Closing Costs
When it comes to purchasing your first home, saving for a down payment and closing costs are two of the most important steps for buyers to take. Saving for a down payment can be a daunting task, but it is essential to keep in mind that you are making a long-term investment in your future.
The first step is to determine how much you need to save for a down payment. Generally, the minimum deposit required when buying a home in Australia is 5-20%. The higher the deposit, the less you’ll pay in interest on your mortgage. In addition to the deposit, you’ll need to factor in closing costs such as legal fees, stamp duty and other fees associated with the purchase.
The second step is to set a target amount and timeline for yourself. Start by researching the average price of a home in your desired area and factor in any additional costs. This will give you a good estimate of what you need to save. When creating your timeline, consider how long it will take to save for the amount you need. You may also want to factor in any potential increases in property prices so you don’t fall short when the time comes to purchase.
The third step is to create a budget that will help you save for your deposit and closing costs. Start by tracking your expenses and setting a realistic budget that allows you to save a portion of your income. Consider allocating a specific amount to your savings each month and stick to it. You may also want to look into setting up a savings account that earns you interest on the money you’ve saved, which can help you reach your target amount faster.
Finally, consider other ways to save for your down payment and closing costs. If you have other sources of income, such as a second job or investments, use these to increase your savings. You may also want to look into government grants or home buying assistance programs that could help you with your purchase.
By following these steps, you can prepare yourself to buy your first home in the future. With a bit of planning and dedication, you can save enough money for a down payment and closing costs and be on your way to owning your dream home.
Begin Researching Market Trends and Local Real Estate Market
When it comes to researching the real estate market, the most important thing to do is to keep up with market trends and understand the local real estate market. This will help prepare you for when you decide to buy your first home in the future.
Start by researching the local real estate market in the areas you are interested in. Look at the median house price, the types of properties available and the number of properties for sale in each area. Consider the characteristics of each area and what influences the real estate market there, such as the proximity to amenities, schools, transport links and more.
It is also important to keep an eye on market trends over time. Look at the change in the median house price in each area over the last year or two. Compare the median house price from previous years to the current median price. This will give you an idea of how the real estate market is changing and what the future might look like.
When looking at market trends, consider how the market is affected by external factors such as the economy, employment rates and consumer confidence. Think about how the current market conditions could affect the future real estate market.
Finally, pay attention to the news for information on house prices, property availability and other real estate related topics. This will help you understand the current market conditions and the potential for future market changes.
By researching the local real estate market and staying up to date with market trends, you will be better prepared when it comes to buying your first home in the future.
Got questions about your home loan? Let's talk
By taking the steps outlined in this blog post, you have taken the first steps to preparing yourself to buy your first home in the future. At Ello Lending, our team of experienced mortgage brokers is here to help you make the right decisions for your financial future. We are passionate about helping first-time buyers navigate the mortgage process and get the best deal possible. If you have any questions or would like to learn more about how we can help, please don’t hesitate to contact us. We look forward to hearing from you soon!
