Ever thought to yourself, how can I buy a house? Wherever you are in your property journey – buying your first home or expanding your investment portfolio – purchasing a property is likely to be part of a strategy to grow your wealth and achieve financial prosperity and security. However, a common trap people can fall into when buying property, is simply not thinking long-term.
While we've seen property values grow very quickly in past decades, property is not always a short-term investment. Here are our top tips for purchasing a home with your future in mind.
1. Think about your current and future needs
Even if your first home isn't the property of your dreams to begin with, it's still wise to approach it as a long-term investment. Many buyers create a checklist before inspecting properties, making sure they align with lifestyle needs now and into the future.
As an owner-occupier or investor, you may opt for an established home, a new build, or a renovation project. This decision will inform the type of home loan options available to you. For example, if planning to build, you might consider a construction loan to pay your licensed builder or self-build with an owner-builder loan.
2. Location, location, location!
Whether the ultimate aim is to get into the market as a first time home buyer, building your nest egg, or finding your ‘forever’ home – where you decide to buy is key.
North of the river or south of the river? An established suburb or a new development? Location is a major factor that can contribute towards determining future property value, and savvy buyers often compare suburbs using tools such as home loan comparison calculators and guides, home loan interest rate guides, or a variable home loan rates overview to understand affordability trends.
It could pay to think outside of the box when buying a home and not just consider the suburbs you're already familiar with. You might be surprised to find other more affordable suburbs that tick all the boxes or offer better amenities – such as schools and childcare facilities, shops, recreational areas, dining and entertainment options – or that have historical value trends.
According to the Real Estate Institute of Western Australia (REIWA), one way to make an informed decision is to look at town planning proposals and see if there are any exciting developments on the horizon that could positively impact future property prices.
3. Have a realistic budget
Before you start your property search, you will need to know not only how much you can borrow but how much you can afford. Use our home loan repayment calculator and compare home loans to help you understand what your repayments will be. This will vary depending on the loan type – for example, whether you choose a principal and interest home loan or an interest only mortgage – as well as whether you choose a product with a variable home loan rate or fixed rate.
Consider the repayments you can manage without impacting your lifestyle and other commitments. It's not just the home loan you're budgeting for – you also need to allow for costs such as home and contents insurance, stamp duty, settlement fees, and council rates.
4. Expect the unexpected
It's difficult to predict when repairs and maintenance issues may come up, periods of vacancy when leasing a property, or interest rate rises – but you can give yourself a buffer of savings to cover circumstances beyond your control.
An important question to ask yourself is "what would happen if I could no longer afford to make my loan repayments because I lost my job, suffered a serious illness or injury, or were to pass away?". Not to be confused with Lenders Mortgage Insurance (LMI) or home and contents insurance, Mortgage Protection Insurance is about ensuring your repayments are covered for these reasons. Other types of insurance are also available – such as life insurance – so ensure you've done your research and compared all your options before committing to a purchase.
It may also be worth thinking about setting up your own emergency fund. Learn more about what an emergency fund is and how to get starting saving one.
5. Explore concessions or grants you might be eligible for
When you’re buying a home, it’s also worth taking the time to understand what grants or concessions may be available to you. Depending on where you live and your circumstances, there may be first home buyer grants, stamp duty concessions, or other incentives that can help reduce upfront costs or make your purchase more affordable. These programs can change over time and often have specific eligibility criteria, so it’s important to check what’s currently available and how it might apply to your situation before you commit.
Important information
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Any advice does not take into account your objectives, financial situation or needs. Read the relevant terms and conditions, before downloading apps or acquiring any product, in considering and deciding whether it is right for you. The Target Market Determinations (TMDs) are available on our website or upon request.