First Home Buyer's Guide
Setting your budget
This really comes down to what you want, where you want it and what you can afford.
What do you want
It may be helpful to build a list of must haves and good to haves. Do you really need 5 bedrooms and a triple garage or is something you can live without?
Where you want it
The old saying ‘worst house in the best street’ is still good property advice. Prices can vary widely between suburbs and once you know what you are willing to live with (and without) you can start to build a picture of where are the places you can get it.
What you can afford
This is a hot topic in lending right now. How can you really work out what a person should be allowed to borrow? How can you really determine what living expenses are discretionary or essential? To some a weekly nanny paddy is essential, to others its not.
A very quick rule of thumb is to work out the maximum amount you’d be happy to pay a month now,
multiply that figure by 2.5 then add two zeros on to the end of that.
Each lender has a different way of calculating what they think your maximum capacity should be and these figures can differ by hundreds of thousands.
Pro tip: Speak to an expert. They can help you work out your borrowing capacity and help you understand the impact of things like increased rates.