Is now the time to buy a first home?

Here are some reasons first home buyers are hesitating to buy a house:

• Demand for property from home buyers and property investors is high. There is so much competition in the market.
• Recent figures indicate that investors are making a return to the property market. Australian Bureau of Statistics (ABS) data shows that in April 2021, investor loans increased by 2.1%, compared with a decline of 1.9% for first home buyer loans.
• Since the end of May 2021, banks have been increasing their fixed interest rates, and rates are tipped to increase in the long run. The ending of the RBA’s Term Funding Facility (TFF) is not the only reason rates are increasing.
• Home buyers are in bidding wars at auctions, and properties frequently sell above their reserve price.
• People think they have not saved up enough for a deposit.

Why Should You Buy A House Now?

The decision to buy a home should not be based only on how the market is performing.

You should also look at your circumstances.

If you’re in doubt about whether this is the time to buy a home or get a home loan, answer these questions:

Is My Job And Income Stable?

You should be earning a regular income and have a stable job to ensure you’re financially secure before you buy a home.

Lenders favour borrowers who have had a steady income for a few years and have a consistent employment history.

If the pandemic has caused some fluctuations in your employment, we know lenders who can accept your income from a new job, freelance work or casual employment.

Even if you’re self-employed, low-doc home loan options are available.

Is My Debt-to-Income Ratio Low Enough?

Your debt-to-income (DTI) ratio helps lenders determine whether you can afford the repayments on your home loan without getting into financial hardship.

It is your total debts and liabilities divided by your gross income (before tax).

The lower your DTI ratio the better, although what is acceptable varies by lender.

Lenders also look at your living expenses to determine whether you should get a home loan.

Try to lower your debt and cut down on unnecessary expenses before applying for a home loan to improve your chances of approval.

Do I Have At Least A 5% Deposit Saved?

You must have enough savings to cover the upfront costs of buying a home.

If your deposit is less than 20%, meaning you’re borrowing more than 80% of the property value, your costs will usually include Lenders Mortgage Insurance (LMI).

Fortunately, there are ways you can borrow more than 80% and avoid LMI.

Is My Credit Score High Enough?

Your credit score is a gauge lenders use to determine whether you can repay a home loan on time.

Each Credit Reporting Bureau (CRB) has its scores, ranging from below average to excellent. The higher the credit score, the better your chances of approval.

Depending on CRB, credit scores range from 299 to 1200.