"Is now a good time to buy a first home or should I wait? Do you think property prices will drop further when the mortgage freeze ends? As a solo first home buyer, I am struggling to find affordable homes at the moment."
Eloise in Sydney, NSW
Top answer provided by:
Thank you for reaching out to us.
Purchasing your first home may seem like a scary journey to embark upon, but it is also an opportunity to plan for successfully, enabling you to make the move as stress-free as possible.
To address your first query of whether you should buy your first home now or wait, it is a difficult one, as trying to predict what the market will do next year is almost impossible due to so many unknown variables. This is also evident if we simply look at the year that has been. I would press upon you that this type of decision isn’t best to be made on timing alone, but in fact, requires other considerations to be addressed that are very important.
To support you with making the decision, a good place to start is to ask yourself some of the following questions:
1. What is your long-term goal with this property?
- Is this a lifestyle property that you will be living in? If so, do you see yourself living there in the next 5+ years? Or..
- Is this an investment property that you plan on using to generate an additional income source?
2. What type of property do you want (is house, unit, apartment, etc) and where is the location?
- Consider non-negotiables vs negotiables (look at what is really important about a property to you versus
what is a ‘nice to have’, which may help you with narrowing the decision)
- Consider doing wider research about the suburb, and any upcoming projects/changes that would impact
your lifestyle or the lifestyle of a potential tenant
3. What is your borrowing capacity and therefore the cash flow impact of the repayments after taking on the debt?
- Easy way to work this out is to look at your current income/debt repayments/fixed living expenses and discretionary spend.
Once you have these figures you will be able to ascertain affordability and your capacity
to maintain the repayments down the track.
If you haven’t done so already, speak to a mortgage broker as they are best placed to help guide you through finding the right solution.
In terms of affordability, I would suggest you check out the below link, as there are first home buyers grants and opportunities to help, depending on which state you are looking to buy in:
Last, but certainly not least, an important consideration to think about is ensuring you have appropriate insurance policies in place as you. This can be broken down into the below categories:
1. General insurance such as building and contents insurance, as well as landlord insurance (if buying an investment property)
2. Personal insurances, such as life cover, total and permanent disablement cover, income protection and critical illness
These are designed to protect your assets and future proof your ability to retain it should an unexpected event occur.
I hope this has helped answer your query and promotes further thinking about the next exciting chapter in your life.
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