The process of purchasing a home can feel overwhelming.
Beyond putting money aside for a home deposit, it can be hard to know how to prepare.
But there are steps you can take β while you're still saving β that will help you get to the point of signing on the dotted line.
Learn about your options and mistakes to avoid
Mortgage broker Craig Morgan says there is an advantage to being a first home buyer, because it can mean you are aware that there's a lot you don't know a lot, and are willing to learn.
He explains that people buying a second or third property can assume they know everything, but "things change so much" and it might have been a decade since their last purchase.
"Gaining some knowledge and some preparation is the absolute key," Mr Morgan says.
Once you've started saving, Mr Morgan says you could approach a mortgage broker to get a better understanding of your borrowing capacity.
There are online borrowing calculators that can help with this too, but they are not as accurate, he says.
"Your income position is not going to change for most people dramatically over the course of one or two years of saving. Whilst you may not have the deposit yet, you can at least find out what you can afford."
He says there are plenty of loan officers at banks and mortgage brokers that will do this for free (they will be hoping you return later on but you should not feel obliged to).
Get clear on your own and shared priorities
If you're buying with a partner, you want to really understand each other's priorities, financial educator Natasha Janssens says.
Taking the time to talk about the significance of a partners' "non-negotiables", "must haves" and "nice to haves" will help when the time comes to negotiate and compromise.
"If you don't understand where each other are coming from and what the significance is of that β¦ conflict can start to arise."
In a couple, we can assume the other person is on the same page, but haven't had those up-front conversations, she says.
Before you've bought a home with someone, Ms Janssens also recommends discussing financial backup plans.
It can be "really uncomfortable", but she suggests workshopping how you both plan to pay the mortgage if you decided to have children or one of you became sick, injured or unemployed.
Get (very) familiar with your finances
The Australian Securities and Investments Commission (ASIC)'sΒ Moneysmart websiteΒ recommends getting your finances sorted.
This includes creating a budget so you are clear on how much you can afford to put towards your deposit.
Financial adviser Scott TaylorΒ says you need a "clear understanding of your money".
The word "budget" can have a negative connotation, but he says a "cashflow plan" includes understanding your lifestyle and where your money goes, recognising expenses such as holidays and eating out.
"There's normally a disconnect between what a bank says you can borrow versus what impact that would have on your lifestyle," Mr Taylor says.
Before you commit to a mortgage, he says it's important to understand what the repayments would mean.
It's common to overestimate what you might be able to save a month and underestimate other expenses, such as annual insurance premiums, council rates and house repairs.
Head to abc.net.au to read the full article.
This article contains general information only. You should consider obtaining independent professional advice in relation to your particular circumstances.
