3 tips for solo first home buyers

Buying a property on your own can have many advantages but it does come with some extra responsibility, which is manageable with a bit of organisation and planning. Here are 3 tips to consider before making the big move.

1.    Budgeting basics

Sorting out your finances should be the first step for anyone looking to buy a property.

• Potential lenders will look over your financial history as part of pre-approval and the application process, so it helps to have a good track record of paying bills on time and at least six months of consistent savings.

• Debt can also impact the amount of money you are able to borrow, so work on consolidating your debts or paying them down and try to avoid any big ticket items like buying a new car that you might need to take out a loan for.

• Talk to a lender or use a home loan calculator for an indication of how much you may be able to borrow so that you can look for properties within your budget and work towards a deposit.

• See if there’s a way that you can inject a little extra into your savings. Can you move back home for a few months? Share rent with a friend? Cancel that gym membership you don’t use or walk to work instead of paying for parking? Review your subscription services or switch to free on-demand apps. Injecting your savings fund with a little extra cash will help provide you with a buffer for additional costs that may arise.

2.    Future gazing

On a solo income, it can be even more important to consider ongoing costs and factor them in to your budget.

• Do your research and factor in bills that you might not have had to pay before, including insurance and council rates. Set up a dedicated savings account to help take the pressure off when things like utilities are due.

• Factor in future interest rate rises. While home owners are currently enjoying record low interest rates, that’s not guaranteed to last. Even a rise of 1% could add hundreds to your loan repayments each month if you choose a variable interest rate, so keep it in mind when crunching your numbers.

• There are a number of different government initiatives available to eligible Australian first home buyers that can potentially save you thousands. Some lenders may also offer a family guarantee, which could reduce the amount you need to save for a deposit and help you avoid costs like Lender’s Mortgage Insurance (LMI).

3.    Location, location, location

Think about the sort of lifestyle you are hoping for and what you want out of your property over the next few years.

• Instead of jumping straight into inner-city living, neighbouring suburbs may be cheaper and grow in value over time. Do your research on an area and compare the prices that houses have gone for recently. Buying in a surrounding suburb could still get you close enough to the action without the postcode price tag.

• Consider the property type. A house with a big yard might be the dream, but a unit or apartment could be a more affordable option to get started. Think about what you want in a property – do you want a pet down the track, space for entertaining or need a garage for storage? Sorting out your priorities will help guide your property search.

• Take a buddy to inspections with you. Having someone else there to provide a second opinion or just bounce ideas off can be a big help. Be sure to chat with the real estate agent as well and ask questions about the property, including why the owners are selling and whether a pest or building report is available to make sure there’s no hidden nasties.  

Before you decide to apply for a loan, make sure you compare your options and seek advice from a financial adviser to determine what’s best for your situation.