Two of Aussie’s longest-serving mortgage brokers share what over 40 years collective experience has taught them and what they really wish they knew about property and finances when they were starting out.
When it comes to managing finances and buying a home, we can learn a lot from experience.
Of course, all good brokers had to start somewhere, taking the time to acquire and improve their knowledge along the way. So we asked two of Aussie’s longest serving brokers to share some of the important lessons they’ve learned as they’ve helped countless Australians buy their own home.
1. Don’t set your goals too high
Mehboob Manji, Franchisee of Aussie Hurstville in southern Sydney, believes getting into the property market quickly is better than waiting to save a bigger deposit for a more expensive property. “Aim for what can be achieved as quickly as possible, especially in the Sydney market,” he says. “If you buy in the right area, chances are you can build up equity faster than waiting to save a bigger deposit. Aim a little bit lower and buy as soon as you can.”
Craig Budden, Franchisee of Aussie Coffs Harbour, agrees that young couples in particular can get stuck on the idea of buying the perfect home. “As I tell my clients, it’s your first home not your final home. Just get something.”
2. Pay off your debts
The interest you pay on credit card debt and car loans is generally high and can add hundreds and in some cases thousands of dollars on top of the amount you borrowed. Instead, you could be putting that money towards your home deposit.
Budden advises paying off all debt first when planning to buy a home. “Reduce those debts first then save towards a deposit. It helps when you can show good savings history,” he says.
Manji advises consolidating your various debts to make it easer to pay them off. “Amalgamate everything into one debt and pay it off as quickly as you can,” he adds.
3. Maintain a clean credit score
Something as simple as an unpaid electricity bill from an old share house can put a mark on your credit history and risk your home loan application being rejected. “Lending criteria has tightened up dramatically in recent years,” Manji says. “Where three years ago lenders would overlook paid small defaults, today they want a clean credit history.”
You can check your credit score via a number of different websites, including CreditSavyy and manage any outstanding debts. Timely payment of bills and a solid savings history can also help.
4. Set a budget and save
You’ve paid off your debts and cleared your credit history – it’s now time to save for a deposit. The best way to do this, suggests Budden, is to set a budget that takes into account your income, expenses and how much you can save. “It’s important to know what’s yours and what’s left over,” he says. “Then you can work out what your savings can be.”
There are many budgeting tools online that can help you achieve your savings goal faster.
LifeHacker is just one site that reviews and suggests some of the most popular tools to get you started.
5. Enlist family help
According to Budden, more and more parents are acting as guarantors on home loans for their children as property prices across Australia continue to rise. “For young couples, it’s a good way to get into the property market,” he says.
Be sure to understand the responsibilities that both parties have when parents act as a guarantor and speak to your broker if you have any questions.
6. Don’t overcommit
Buying a home is an emotional decision so it’s easy to get carried away and spend more than you should. However, it’s unwise to borrow more that you can afford to repay. “Many couples starting out want the big splashy house straight away,” says Budden. “My advice is, don’t overcommit.”
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