If you have finally saved up enough for a house deposit, it can be tempting to think this might be the time to buy. However having enough money to buy does not necessarily mean this is the right time to buy. Here are some things you should consider before taking the plunge.
How long do you plan to stay in this house?
With the high cost of housing in Australia, the cost of stamp duty and real estate fees (both of which are calculated as a percentage of the house price) can make moving very expensive. This means that if you need to move in the first few years after buying, for any reason, you will often lose money on the transaction. It can be a good idea to assess if you will need to leave the area or need more space. If so, then you may need to reassess your plans to buy. If you plan of being there for a while, then go ahead and look at homes
How confident are you in your income?
If you are currently earning a high income, it can be tempting to think that you will be always be earning a similar income. However, if you work in an industry that is very cyclical or where your salary is based on commission, you can easily find that you have times where you are earning much less money or have periods of unemployment. This can mean you may not have the same capacity to pay a large mortgage. It can be a good idea to take on a mortgage that you can pay on a smaller salary so that you have some flexibility if your income reduces unexpectedly.
How good are you with repairs?
When you buy a home you are now also responsible for all of the repairs and maintenance on the house. These can be quite expensive to fully outsource so it is a good idea to rent if you don’t have the extra funds for a handyman to do repairs or the skills and inclination to do your own repairs. A rule of thumb is that you will spend 1% of the cost of your home in maintenance costs each year, but older houses or houses that have been poorly maintained previously may require even more money each year. Renters can simply call their rental agent, and they organise repairs at no additional cost to the renter, making this a good option for people who don’t want the responsibility of organising home repairs.
Depending which stage of life you are in, it can sometimes be a good idea to rent rather than buy a home. Why not explore the housing options with your local rental agent to see which option is best suited your current situation?