Buying a home is a big decision. Whether you are an investor, first home buyer or you are planning an upgrade, it is easy to be overawed when you hit the market. Everyone will give you an opinion – from friends and family to real estate professionals – and some of this may be good advice. Ultimately, however, you make the decision and the final decision will be determined by the level of comfort you feel. Before you purchase that property though – work your way through this checklist of three questions; they may be helpful to frame your decision and create a better level of comfort.
1 Why am I buying a home?
This may sound a silly question but financially this is the biggest commitment you are likely to make. Global surveys consistently find five reasons for people buying a home. Only one of these, renting is not a good investment, relates to finances. The other four focus on the family and the future. Those reasons are about providing safe places and a good education for children and having room for a family to grow in a living space which the family controls (for restoration or renovation).
So, do any of these ring true for you? Are they the factors you are considering? (N.B. If you are an investor, your are probably not thinking of purchasing a ‘home’ but you could find useful information here) Of course, these reasons imply a family decision – those involved in the decision will help determine why you actually want the home. A list of your reasons is a great way to get started – seeing these in print is affirming but also a good way of gauging their importance.
There is a lot of noise in the media about the current property market. After a long period of growth, there is strong evidence the market is cooling and will likely stay that way for some time. There are a number of people predicting big price drops, but most commentators are not seeing reason to panic, rather market correction – just another part of the property cycle.
In the current market the buyer has the advantage, and there is more opportunity for the buyer to hold out for a lower price. Regardless of the property cycle, it still has to be the right time for you to buy.
3 What about the mortgage rates?
Of all the variables in property purchase, the mortgage rate is the one that can have long-term impact. There is always a possibility of the mortgage rate changing – while this has been a downward trend in Australia for quite a while, there is no guarantee this will continue. Many commentators feel the rates will begin to rise slowly in the coming years – around 1 percentage point by the end of 2019.
This is a very important consideration, as any rise in mortgage interest rates will impact the amount of your monthly repayments. A rise of 0.15 percentage points will add around $450 a year to repayments on a $400,000 mortgage (if the borrower is paying principal and interest).
As we have already stated, you are the only one who will know if it is the right time to buy a home. There are people to help with the decision though. Accrue Real Estate not only know the property market but have strong relationships with professionals who can assist with financial questions. The decision is still yours but with Accrue Real Estate’s help, it can be an informed decision.