1. Establish and Review Your Household Budget
Understanding your finances is the first crucial step in the home-buying process. Assess your income, debts, and monthly expenditures to determine what you can comfortably repay on a home loan, whether monthly, fortnightly, or weekly. This clarity will set realistic expectations for your buying potential and ensure that future mortgage payments are manageable within your lifestyle.
2. Review Your Borrowing Capacity
With your household budget established, consult with your broker to determine your borrowing capacity. This includes ‘stress testing’ different interest rates and borrowing scenarios to see how much you could afford if rates rise, ensuring you remain protected against potential increases. This step will refine your price range and help identify the right mortgage product for your needs.
3. Establish the Deposit Needed
As part of your borrowing capacity, your broker will identify the amount needed for a deposit, including any relevant fees or possible government grants. If the required funds aren’t readily available, your broker will assist you in creating a savings plan to reach your goal efficiently. This plan will align with your budget and timeline for purchasing, making the path to your new purchase clear and structured.
4. Conduct Property Research
Spend 3-6 months researching properties in your desired locations to understand local market conditions and price trends. This phase is vital to familiarise yourself with the market dynamics and will aid in making an informed decision when selecting your home.
By spending this time watching your specific market, you will quickly become proficient in understanding which properties present value and what you should pay for a specific property.
5. Submit a Pre-Approval Application
Once your budget and deposit are established and potential areas are selected, your broker can submit a pre-approval application to your selected lender. Pre-approval provides an indication from the lender that they will lend you the required funds to purchase your property, subject to any other conditions they may still have. These approvals typically last for up to three months before they need to be refreshed.
6. Get Ready to Purchase
With finance pre-approved, you’re ready to actively make offers or bid at auctions. It’s essential at this stage to have a conveyancer or solicitor on hand to handle legal matters, including contract reviews and formal exchanges. Your solicitor or conveyancer will provide you with a legal understanding of your obligations and risks before entering into a specific contract.
Congratulations, You Are Now BUY READY!
Congratulations on successfully navigating the initial stages of the home-buying process! You are now BUY READY, equipped with a solid financial plan, pre-approved finance, and a clear understanding of the market. This preparation positions you advantageously as you enter the property market, ready to make informed and confident offers.
As you move forward, remember that Track Financial is here to assist you through the next steps of your journey towards homeownership. Let’s make your dream purchase a reality!
About Track Financial
At Track Financial, our mission is to help people live their lives free from financial strain and build their wealth steadily over time. We create simple, elegant financial solutions, offering expert advice and guidance for everyday Australians. This allows them to achieve their financial goals faster and cultivate the lifestyle they really want.
