First Home Buyer - Taking The Plunge

2008-03-05 Word Count: 592 Category: Real Estate

If the prospect of buying your first home is a touch terrifying, believe me, you're not alone. I have recently 'taken the plunge' and 'rock'n'rolled' into what I consider an enormous debt, but once it's done the rollercoaster ride of feelings, starting from scary followed by a belly flip and ending with indescribable happiness is very rewarding. Owning your own little bungalow that nobody can take away from you (unless of course you don't pay those forever resented mortgage repayments) is a great feeling you can't replace.

There are many important decisions you'll have to make on your journey towards buying and respectively owning your first home, but if you do your research and let the industry experts guide you along the way, the experience won't be so daunting.

First things first - the majority of first home buyers need to borrow money from a lender. In our technology swept world, internet is one of the main, and let’s face it, most convenient, sources of home loan and property research. All the reputable mortgage providers, whether it be banks or the non-bank lenders have easy to follow websites, so your home loan research is not going to be that difficult. First home buyer packages are designed specifically for first home buyers and generally offer guidance, helpful hints, reduced interest rates and packaged home loan fees. In the current, unpredictable market, fixed interest rates with 100% offset accounts are becoming more and more popular. Having your interest rate fixed gives you the comfort and guarantee that your interest rate and respectively minimum monthly mortgage repayments won’t change during the fixed rate period. One of the biggest benefits of the 100% offset account for first home buyers is the ability to make additional repayments towards your home loan and essentially shave years off your loan term.

Affordability versus Aspirations – most first home buyers know what they want, but be sure you can afford it. Many of us like to have nice things, new shoes, constant stream of new clothes, new motorbikes, new cars. Before you make the decision to buy your first home and sign up for what is likely to be the biggest debt you’ve ever imagined, you’ll have to face the unimaginable and give up some or all of those nice things for a little while. The new generation first home buyers want it all and want it now. Think of our parents. They inherited old lounges and wardrobes from their parents and aunts, saved, saved, saved, and ultimately paid off their home loans much faster than any of us can even begin to imagine. Is it more important to drive around in a flash car or get that first home and live under your own roof? So, before I go into an analysis of extravagant spending, make sure you aspire to buy your first home in an area you can afford and importantly speak to a few mortgage industry experts to get a feel for what would be a ‘healthy’ part of your income to spend on mortgage repayments. As a rule of thumb most experts say you should not spend more that 30 -35% of your gross income on mortgage repayments.

With rents continuing to rise, I’m glad I took the plunge, bought a property in a nice area that was affordable for me, fixed the interest rate on my home loan and included a 100% offset account for many added benefits - and you can too.

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Vicky Edema has been the Managing Director of Austral Mortgage Corporation since 1992, the company specialised in first home buyer loan. Austral's first home buyer club provide many benefits for all first home buyers. Austral URL: www.australmortgage.com.au