|Posted by Uma Mahadeva 26/04/2017As a person buying the first home you are essentially in a dilemma. Even assuming you have the funds and are able to service the loan the thought of owning a property and sacrificing a little of your lifestyle is still daunting. Repaying the loan is a long war made up of small battles. Property values are a moving target – the longer you wait the more they move outside your affordability range. Fortunately there is help at hand. Here are some strategies to help you fight.
1. Just do it.
Property values are a moving target? Get in the race now. Get a property- any property. As a first home buyer you are usually young and mobile so you don’t have to be fussy. If you can’t afford a house buy a townhouse. If you can’t afford a townhouse buy an apartment. If you can’t afford an apartment buy land. Once you are in the property market you are the moving target and you won’t have to worry about price rises for a while.
There are many ways of getting a deposit. These include a gift from the family, genuine savings and capitalising as much of the deposit into the loan as possible (some lenders may lend up to 99% the property value). Desperate times may require desperate measures and some people have considered going into a property together with a friend then one person buys the other out keeping the property for himself and setting up the other person for a sizeable deposit for the new home.
Like a General going into battle you need to heed the advice of your intelligence unit- your mortgage broker, your lawyer and your accountant. At Objective Financial Solutions we can be the one stop intelligence unit to offer you finance advice or put you in touch with experts in the other areas of advice.
3. Interest only.
Although most banks are cutting out interest only loans for owner occupied properties there are a few that still do this. Consider setting up an interest only loan so that you optimise cash flow. Most interest only loans still allow you to pay up to 10000 extra repayments per annum and some even allow a large percentage offset of the loan so you can hit the principal as well. Want to know more? Ask us how.
Repayments are the small battles that you have to fight to win the war. Fortunately you don’t have to refer to Sun Tzu to win these battles. Here are some simple tips for your arsenal:-
- Make extra repayments over and above the minimum repayments.
- Have an offset facility.
- Setup repayments to occur after as soon as your salary is credited into your account.
- Increase the frequency of repayments. Weekly as opposed to fortnightly.
- Put all your tax return lump sums towards the loan to reduce the principal.
- Consider renting out a room.
- Finally as there are so many changes occurring to the lending products you need to review your loan every 6 months to ensure you are have the optimum loan for your circumstances.
As the quotation from Sun Tzu above says you need to win first then go to war. You need to be thoroughly prepared and know what you are up against before you can get into the property market. We are here to help you do just that. So call us on the number below and we look forward to helping you gain the upper hand in the war to own a property. Success!