Signs you’re ready to buy

Age, career, family, saving the deposit – so many factors might influence the decision to purchase your first property. How do you know when the time is right?

Here are some tell-tale signs that you are ready to buy your first home.

- You've saved the deposit
A home is probably the biggest purchase you will make, so you'll probably require a loan from a bank, financial institution or mortgage broker. In return, they will require a cash deposit of around 15-20 per cent of the value of the property.

You will also need funds to pay additional expenses such as solicitor's fees, home loan establishment fees and settlement costs. These expenses range somewhere between 2 and 7 per cent of the value of the property.

- You know what you can afford
Ideally, your monthly mortgage repayments should be less than or equal to 25 to 30 per cent of your gross monthly income. You're in an even better position if all outgoings, including mortgage, credit card bills, car payments and living expenses do not exceed 30 per cent of your income.
An online calculator will give you an idea of what you can borrow, though that should be used as a guide only.

- You know the market
Research is vital when planning to buy a property. Get familiar with the market you are buying in to, paying attention to sale prices rather than the asking price, as these can be quite different. In addition, ask your real estate agent or advisor for an update on the current state of the market. Are there more properties currently on the market than buyers, or are buyers competing for properties?

- You have a good credit rating
When you apply for a home loan the mortgage provider will look at your credit history to determine eligibility or any risks associated with lending you money. The credit history will show previous loans you have applied for, whether you've paid these loans out, current debt, the number of bank accounts you have open etc.

If you haven't already done so, check your file before applying for a loan. This will give you time to check the accuracy of the report and correct any errors it may contain.

- You understand the commitment
Buying a property means ongoing commitment and expenses. Before committing, make sure you understand the ongoing expenses such as insurance, council rates, water rates, owners' corporation levies and general maintenance.

If you can tick off all the above markers, you are definitely ready to buy. The next step is to obtain a pre-approval for your home loan, so that when you do find the right property, you can make an offer straight away.