Are you aware of how to determine the property that you can afford or the purchase price that you can afford?
Let’s look at a few steps that will potentially help you determine what that purchase price is.
Step 1
Start by completing a detailed budget. This will determine how much you can afford in repayments per week or per month, to go towards a loan, taking into account any rent that you’re paying at the moment and savings that you’re accumulating. It will also help you understand what sort of savings you can contribute each month that can go towards the deposit.
Step 2
Determine what the purchase price is for the type of property that you would like in the area where you want to live. What’s that range that you need to work towards?
Step 3
The third step is to work back from that purchase price. For example, if it’s a $600,000 property, and you need to save a 10% deposit, that’s $60,000 plus costs. How long is it going to take you to save that based on what you can afford to save every month? For example, if it’s a $600,000 property, and you’re putting in $60,000, you need a loan of $540,000. What are the repayments on that, and are you comfortable with repayments for a $540,000 loan based on the budget that you completed. Looking at the savings that you’re able to contribute each month and rent that you’re paying, do they equate to repayments on a loan of $540,000?
Step 4
What is the timeframe for you to reach that savings goal?
Following these four steps will make it easier and clearer for you and give you a chance to be able to set a goal within a certain timeframe.
