When is not about timing the market

First, let’s bust a myth. I am not talking about timing the market. Trying to get in when prices are low or waiting until prices drop. No, that is not the “when”. I have heard many first home buyers say they are going to wait “for the market to come down” or “for the interest rates to come down”.

Though this may seem like a smart plan -or a reasonable thought-, I am yet to see it work…. Maybe because we mostly help Sydney based First Home Buyers but prices do not “come back”. The rate of growth slows down but only to take off again. And interest rates do come down but that normally means prices go up. There are just too many eager buyers and not enough properties to take a “sit and wait” approach to a First Home purchase.

 

No, I am talking about being ready in regards to your financial situation, your life stage, your employment stability and your readiness / desire / eagerness to own your own piece of the world.

Being financially ready

 

When gauging the best time to buy your first home from a perspective of financial readiness, it’s important to consider the following factors. First, a budget. Having an understanding of what comes in and what goes out on a monthly basis. Knowing you are living within your means. Having regular savings. Nothing flash but the confidence that you know what you are doing financially. Second, understanding not only what the bank says you can afford but also what you are comfortable paying each month. While lenders will offer a loan amount based on your financial profile, it’s essential to assess whether those repayments align with your comfort level, lifestyle and long-term financial goals. A good rule of thumb is comparing it to what you are paying in rent or towards savings at the moment.

Third, having a healthy savings buffer. Beyond the deposit payment, you’ll need to cover additional expenses such as application fees, conveyancing fees, moving cost and potential repairs or home improvements. Ensuring you have ample savings not only provides a safety net for unforeseen costs but also demonstrates financial prudence to lenders. A good rule of thumb here is work out all your expenses over a month and multiply that by 3. That should be your minimum savings after the purchasing costs are paid. An alternative to this is having family as guarantor. This eliminates or reduces the need for a deposit but be careful. It can also mask a potential problem you have with budgeting. A lack of savings is ok if you are early in a job and have not had time to save yet but if you are several years into your career and don’t have savings you might need to examine why that is.

Employment stability

Job security plays a pivotal role. Waiting until you are confident there is stable and reliable income before diving into home ownership will reduce the risk of financial strain. Permanent full time employment is best but as employers shift more and more to contract roles and flexible workforce (casual and part time) that might not be possible. By carefully weighing your financial capabilities and ongoing earning capacity, you can make an informed decision about the right time to embark on the journey of owning your first home.

The right life stage

Determining the best timing for purchasing your first home often involves considering your life stage and future plans. If you’re in a phase where stability is a priority, such as starting a family or pursuing a long-term career path, buying a home may offer the sense of security you desire. However, if you have aspirations of travel or like to be transient, it might be better to delay home ownership.

Assessing whether you crave the stability of home ownership or the flexibility of flexibility is crucial. While owning a home provides a sense of permanence, it also entails responsibilities and commitments that may not align with your current lifestyle. By evaluating your current life stage, future aspirations, and preferences for stability or flexibility, you can make a well-informed decision about the optimal timing to embark on the journey of buying your first home.

Desire & eagerness

The decision of when to buy your first home often intertwines with a deep-seated desire and eagerness to achieve this significant milestone. For many, the dream of homeownership serves as a powerful driving force, propelling them towards action. financial independence and personal fulfilment. By channelling your eagerness into diligent planning, saving, and research, you can ensure that your journey towards home ownership is not only driven by passion but also grounded in confidence and sound decision-making.

Waiting for the right moment, when your enthusiasm is coupled with preparedness, should lead to a rewarding and successful outcome as a first-time homebuyer.

Conclusion

Buying your first home is exciting! A significant milestone that requires research, careful thought and planning. By knowing your why, where, and when, you can approach the process with confidence and clarity. Whether you’re seeking financial security, investment opportunities, or a place to call home, the end result is a little spot in the world you can call yours and that feels good!

Let this guide equip you with the knowledge and insights needed to make informed decisions. As you embark on this exciting journey, remember that the path to home ownership is as unique as you are. Happy house hunting!

Thank you for reading this article. This ends our First Home Buyer Guide series. We hope this could help you as you embark your journey as a First Home Buyer.

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For questions, please feel free to send us a message. Email us at erik@micah.com.au