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5 factors to consider when buying a house

Buying a new home is almost always challenging. Unless you have a vault filled with gold hidden somewhere, it’s very likely that you’ll have to think long and hard about whether you’re ready to make this kind of financial commitment.

If done right, buying a home can be both a smart purchase and good investment. It doesn’t matter if you’ve purchased before, buying a house is both an exciting and stressful experience, which is why it’s important to keep in mind that it involves many factors.

It’s easy to get caught up in the anticipation of a new home, but you must also be careful when making an investment as big as this so that you don’t miss the finer details. Here are 6 factors to consider when buying a house:

1. Check your finances

small-houses-stacked-coins You can get a home loan from most lenders in Australia by providing at least 5% of the price of the house as a deposit, though in general you may want to have at least a 20% deposit as your deposit amount affects your loan-to-value ratio (LVR). To the lender, this makes up your risk as a borrower and your borrowing power.

Along with your upfront costs, one of the other finer details you need to make sure you can meet is your ability to make your home loan repayments. It’s important to evaluate where you stand financially before you invest in a property. Do you have enough cash in savings to be able to pay your upfront costs? Or can you afford to take on the cost of repaying a mortgage? Talking to your lender or a Home Loan Specialist about your options can help you find out how much you can borrow.

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2. Map out a plan of attack

After you’ve evaluated your financial position, it’s important to use the knowledge you’ve gained to create a budget for the investment and stick to it. You should avoid overspending when buying a house, as this could jeopardise your financial stability. When looking at properties, it is ideal to only look at the houses within your budget.

3. Location is important

Whether you’re moving to a different state or staying in the same neighbourhood, you should do your research before spending too much money on real estate. The prices of properties often fluctuate depending on the market.

The prices of houses tend to vary in different areas depending upon several different factors. For instance, a house in an area that is well connected to public transport and shops will cost more than a house in the suburbs.

Normally, most locations have their own unique advantages. It is a good idea to do your property research to find out what suits your budget and meets all your needs before you decide on which property to buy or invest in.

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4. The condition of the house


When you buy a house, you should inspect it thoroughly. Maintenance costs may end up eating heavily into your savings if you buy a house that’s always in need of repairs. Ask questions about the condition of the house, such as building materials, any renovations, additions etc to avoid ending up with a bad deal. Getting professional inspections done by building inspectors and conveyancers can assess the property for any issues.

5. Your commitment

Whether you're buying a house to live in or for an investment, you may want to consider your commitment to it and whether it's worth it. Committing to a house over a long period of time can allow it to rise in value and help you build equity. Thinking about whether you have the financial stability to buy and maintain it can help you make this decision.

You may also want to make sure your family’s financial future isn’t threatened because of the investments you’re making now. Buying life insurance before purchasing a house can be a way to do so. When you’re not there to provide for your family, they can use the life insurance to pay off your home loan. This way you can make sure that your family is able to keep the home and be safe, even in your absence.

Our Home Loan Specialists are eager to help you in buying a new house so, get in touch with us today and let our capable team guide you to your dream home.

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Tags: first home buyer, property, investment, home loan, deposit, new purchase

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# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of lenders including ClickLoans, a related body corporate of Auscred Services. Although Lendi compares over 1600 products from over 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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