Your financials matter

Your financials matter as much as the property you are investing in. In order to make sure your first home purchase and investment goes as smoothly as possible, you have to be financially prepared.

Here is a quick rundown on financial planning essentials for first time home buyers.

Are your creditworthy?

You have to get a clear understanding of your credit scores and credit reports. Your credit score refers to the numerical version of your credit report. It is best to have to higher score because this increases your chances of getting a lower mortgage rate. Otherwise, you will have to manage with higher rates if you have lower credit score.

Technically, your credit history will be comprised of:

credit enquiries or applications you made commercially and personally
open and current credit accounts including credit cards, car loans or home loans
commercial and personal accounts that have been overdue or late
previous bankruptcy information
court writs or court judgments

Often, a bad credit rating is linked to a credit card debt. If you are just planning to buy then at least try to improve your credit card payments for 12 months. Pay bills on time to lift earn credit points. All home loans require credit rating so you must have at least a record of your past finances. If you do not have any credit rating then you can take out a credit card. Purchase just a few items and pay on time. This should build your credit rating enough in time for your purchase.

A good credit score also gives you more and larger financing options. Banks and home lenders or providers see higher credit scores positively thus loan programs may become more favorable. Make sure to consult with your financial planner or Sydney mortgage broker who can give you good advice on how to manage credit issues.

Know the deposit amount you need to enter the property market

Nearly all banks and other lenders will request a minimum deposit to guarantee the loan. This is crucial because this assures lenders they have a stake in the transaction. Talk to your mortgage broker about different loan products and see if the minimum deposits vary between them. Depending on what you find, it could impact when you enter the property market.

Put aside your monthly mortgage payment

Unless otherwise you can pay for the entire property, you have to plan out how much monthly mortgage you have to pay. As much as possible, check your overall finances with your mortgage broker and determine just how much you can commit per month for the mortgage.

Consider your principal and interest payment when determining the amount. Consider setting up a separate account where all your repayments can go into. Even if you have no plans to buy a property until next year or later, it is good practise to start setting aside the monthly repayment now so you can adjust your lifestyle to your future situation.

Ready to get started with your first home purchase?

These are just some of the ways you can prepare for your first home buy or property investment .

If you are looking for real estate agents, mortgage brokers, and financial planners, conveyancers etc. Check out our Tradebusters Connect Top 3 Local Choice directory near you.. We have a list of handpicked the best recommended businesses that are ready to help you through the process from start to finish.