Buying your own home is something that most Australians dream of. However, with ever-increasing prices and economic pressure, this dream is becoming harder and harder to realize. This is especially true for young people looking to buy their first home.
In fact, the prohibitive cost of buying a home to live in is one of the reasons more young people are looking at where to buy an investment property. Choosing this type of property allows you to get on the ladder with fewer funds upfront and less risk as someone else is paying the rent and your mortgage. Click here to know more about Mortgage Company Long Island
In either scenario, to successfully purchase a property, you’re going to need to create a budget.
The Purpose Of The Budget
You can tell the bank or a dedicated Mortgage Company Charlotte NC how much you earn and your current debts and they’ll tell you how much they are prepared to lend you. That allows you to start shopping. In many cases, people will look at houses over the value they can afford in the hope that they can negotiate a better price. Of course, the risk is that you end up in over your head and can’t afford to keep paying the mortgage. That’s the real purpose of the budget.
You need to consider the following:
Deposit
Before you can buy a property you need a deposit. The amount of this will depend on the value of the house and how much of that value you are borrowing. In most cases, you’ll need a 20% deposit but there are government schemes that can help.
Remember, if you borrow the deposit of someone you’ll need to declare the loan to your mortgage company and it will reduce the amount they are prepared to lend you.
Debts
Another important consideration when purchasing a house is how much money do you owe? You need to know how much you owe and what the monthly payment is on these debts. It’s also important to check if the payments are likely to change, especially if they could increase. You need to budget for a worst-case scenario.
Income
To create your budget, you need to know exactly what your income is. That’s regular steady, guaranteed income, not extras from potential sales or extra gigs. It’s important to be accurate with this figure.
Outgoings
The final part of the puzzle is the outgoings. You need to know how much the mortgage will cost you a month, what bills the property is likely to incur, and everything else you spend money on per month.
This figure must be less than your income or you’re likely to get into financial trouble.
If it’s higher you’re going to need to reduce the mortgage amount, eliminate debts, or look at ways to cut your outgoings. But, when reducing outgoings, you need to be realistic. It may be possible to increase your income but this is usually more difficult, especially if you are doing a job you love.
