Work out a budget and stick to it

LOOKING to get on the property ladder for the first time?

Picture: ©iStockphoto/Dem10

LOOKING to get on the property ladder for the first time?

Aim to save at least five per cent for a deposit, a Gladstone finance broker advises.

Greg Hill of First Chartered Capital said those wishing to buy a home should establish a budget for themselves, work out what they are spending, what they can save - and stick to this budget.

“If what they can save plus the rent they have been paying equate to a projected mortgage payment then they are half way there, and if they have a proven history of meeting this over a period of time, even better,” he said.

While potential home-owners should aim for at least five per cent, more will always be looked on favourably.

“The five per cent is in addition to the first home owners grant and in some cases this may still not meet bank lending criteria,” he said.

Mr Hill said it was important to speak with an experienced finance or mortgage professional that had a wide range of lenders and lending policies available.

“A borrower needs to take some care that a lending application is not put forward unless the bank's lending criteria is met, otherwise a trail of credit inquiry can mount up on their credit file, making it all the more difficult to place a deal with the lender they perhaps should have gone to in the first place,” he said.

Mr Hill said the tightening of bank lending policies had already impacted the first home buyer market and some prospective purchasers may no longer qualify for a home loan despite whether they had the first home buyers boost or not.

“Others that did jump in last year on low or no deposit home loans when prices were peaking could well find themselves owing more than their home is now worth, but we should see this corrected over time when values improve,” he said.

Originally published as Work out a budget and stick to it