Four questions you must ask yourself before buying real estate
Home prices have held up well during the pandemic, but there are some key financial questions that buyers need to ask before they sign on the dotted line.
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Australians’ love affair with real estate has continued during the coronavirus, keeping house prices relatively stable despite the biggest economic shock since World War Two.
Home values are higher in every capital city except Perth over the past 12 months, according to CoreLogic data, and in most capitals – including Melbourne – they’re up more than 3 per cent.
People typically move homes every five to 10 years, and whether you’re a first homebuyer, upgrader or investor, property specialists say there are key questions to ask yourself before handing over your money.
WHAT ARE MY NON-NEGOTIABLES?
Know what are the deal breakers and what will tick your boxes, says buyers’ agent Michelle May.
“You cannot change being on a really busy road – but those scatter cushions you fell in love with at the open home – you can buy those,” she says.
“Look at what you envision your life being in the next five to 10 years and what the property may need to do for you in that time. Will you have children or perhaps be empty nesters?”
WHAT ARE MY EXPENSES?
“Be brutally honest with yourself and stick to your budget,” May says.
“There can often be a very big difference in what the bank thinks you can afford and what you know your personal budget will allow for.”
Lenders will examine your spending during the application process, so know your costs to avoid disappointment.
HOW MUCH CAN I BORROW?
Understand your borrowing limit before you start a property hunt, and don’t be swayed by a bank’s high pre-approval offer that might max out your debt and cause financial stress.
“Don’t go falling in love with a property until you have your finance and pre-approval,” May says.
Turner Real Estate chief executive officer Emma Slape says your finances should also include a reserve to cover the unexpected.
“It’s essential to chat to your mortgage broker first and understand your borrowing capacity,” she says.
WHERE IS THE SUBURB HEADING?
“Your local agent should be able to offer solid advice on the patterns in an area,” Slape says.
Buyers should take time to get to know their potential neighbourhood.
May says you should consider things such as commuting and local schools, and pick potential pockets you prefer.
“Mark them out on a map and keep an eye on this when listings arise,” she says.
Originally published as Four questions you must ask yourself before buying real estate