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Buying a house does not happen overnight. There is a lot of researching, dreaming and most importantly saving, that has to occur before you put the pen to paper. If home ownership currently feels like a pipe dream, it is important to make yourself a solid plan. With planning, you can turn the distant dream, into a not-so-distant reality.
Consider your life five years from now, and ask yourself the following questions.
Where do you want to live?
You may not have a solid, defined answer to this question, but its definitely something you should start thinking about. Are you all about the big city life, or would you prefer the space and clarity of the countryside? Do you like bushy surrounds or would you fancy a sea breeze? Answers to these questions can quickly start to shape your budget, and help judge roughly how much money you will need to put away each week. Start researching; look up median house prices, go to some auctions, chat to a real estate agent. Get a feel of your desired area, and see whether your expectations are realistic, or out of reach. It is important to do all of this well in advance to ensure you are not met with a shock when you start properly house hunting, and also to ensure you make educated choices.
Who will you be buying with?
Are you buying on your own? With a partner? With children? This is a difficult question to answer as we cannot predict what the future holds. When making a 5 year plan it is best to consider all scenarios. Save as much as you possibly can, with the view that you will be taking on a mortgage alone. This way, if you have a partner when its time to buy you can combine your savings and ease the financial load, but you are not relying on relationship success to fulfil your goal.
Our furry friends can also impact our house hunting. Apartments, or any subdivided land, may be governed by a body corporate that have rules against pets. Be sure to investigate where you can/can’t bring your loyal pal, to avoid a difficult ultimatum in the future.
Are you planning on staying in the same job?
Financial stability is key when planning to buy a house. If you are unhappy in your current job and plan on changing careers shortly, maybe you should shelf the house dream until you are settled. While being a home owner is awesome, it can definitely restrict your financial freedom. It is a lot easier to complete further studies or accept a lower paying job in order to pursue your career goals when you do not have mortgage repayments to keep up with. Of course, you can keep saving in the meantime, but make sure you don’t jump into a huge commitment like a home loan unless you have income stability. While lenders can assess your financial situation, only you can assess your ambition.
Are you planning on taking any holidays?
We all love a getaway. There ain’t nothin' like laying on a Mediterranean beach sipping cocktails in the sun. Unfortunately, travel is not cheap. It can take months – years – of saving for just a few weeks abroad. Many young adults find themselves facing a quarter life crisis; do I travel or do I save for a house? While it is possible to do both, it is hard. Sometimes it’s a good idea to feed the travel bug first, and then focus on a house once the itch has been scratched. Travelling can provide you with a certain sense of clarity, and you may find that the things you thought you needed (spa bath, triple garage, sensor lighting, etc.) are no longer necessities.
Is buying a house your number 1 priority?
A question that many forget to consider – do you really want to buy a house? While home ownership is often ranked as the highest measure of success in adulthood, as with all things- it's not for everyone. Have a think about whether this is something you really want. Passion drives success, and if you are not passionate about home ownership, it may become a fruitless mission. It is okay if you would prefer to focus on other things; travel, your career, your education, etc.
For those that truly want to own a house, make it your number one priority. It is common to forgo other luxuries when saving for a home. Trust me, it will be worth every skipped latte, missed night out and pair of new shoes when you are standing in your very own home; when you can proudly say that you’ve accomplished a goal you set yourself five years earlier.
Disclaimer: The advice provided in this article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. We encourage you to consult a finance professional before acting on any advice provided in this article or on this website.