When it comes to taking control of your personal finances, most don’t take the time to create a budget.
A budget doesn’t mean you stop enjoying life. The primary purpose is providing you with a guideline to understanding what you can afford to spend on a property. This is irrelevant if you are buying a home to live in, use as a holiday home or to invest. It also allows you to discover what you are further willing to sacrifice to increase your ability to repay a loan.
Obtaining a borrowing capacity is a starting point before sourcing a property, but it’s not as important as acknowledging what the loan repayments will be and what the property expenses will cost you.
This really is a vital step that you can’t afford to skip. Budgeting really is a key ingredient of wealth creation, therefore you need to find the time to do it – and properly! If you haven’t got the motivation or you are worried it may cause some confrontation with your partner, then get some advice. There are many good financial planners that can help you discover your ability to save and teach you ways to improve your cash flow.
There is nothing worse than looking at a $1 million house if you can only afford a $750,000 Townhouse. As property advisers we aim to present opportunities that meet your objectives and budget. It’s also quite sensible to work on buying something that is lower than your budget to ensure you haven’t recorded your budget incorrectly! Overstating a budget helps to reduce this risk of over capitalizing on your purchase.
We have found purchasing an off-the-plan property a great strategy for first home buyers or investors. It creates time to practice the budget without the need of paying a mortgage. Remember you only purchase a mortgage/loan once the property settles. If the property has a nine (9) months construction period, then you have a lot of time to test your budget . Ensure you can manage a sustainable budget without compromising to heavily on your social life. You may even find that the thought of owning the property in the future will increase your motivation to increase your savings capacity above your original budget.
We always responsibly help people buy the right property to cater their objectives. Our property selection will always consider the long term opportunities to generate capital growth, however if you are unable to keep the property, then it’s pointless. This could also further worsen your situation before buying the property in the fist place as most buyers need to borrow money.
Take your time, be practical and set up a budget that you are willing to cooperate with. Ultimately you are not in control of the property’s capital growth, but you are 100% in control of your budget.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us. We welcome the opportunity to assist you.
Jan 2018
