Buying a home comes with a laundry list of considerations. One needs to account for everything from aesthetics and functionality to finance and overall convenience. It’s not only a colossal transaction with serious implications but a long-term investment, a personal choice in expression and a move towards stability and settling down. This is a life-altering choice that no one should make lightly.
Of course, financial readiness tops the list of considerations. Determining the affordability of a home purchase means looking at factors like:
- down payments
- mortgages
- ongoing maintenance costs.
Each of these requires preparation and an understanding of the process. Evaluating your credit score is equally vital, as this directly impacts your loan eligibility and subsequent interest rates.
Regarding the property itself, one of the biggest decisions you’ll need to make is location. This affects not only convenience but also potential value appreciation. This is especially important if you want to leverage your home as an investment, more than just a place to stay.
The property’s size and layout should suit your immediate needs and future plans regarding aesthetics and functionality. You’ll also want to review market trends and cycles to make an informed buying decision. Both of these areas often call for some professional assistance.
Are you financially ready?
Let’s begin by emphasising the importance of financial readiness.
As mentioned, your credit score is your foremost consideration in this area. This will significantly influence your mortgage interest rates. A higher score often leads to better terms.
The next step is to review your debt-to-income ratio. In other words, your monthly debt payments are compared to your income. Lenders usually prefer a ratio below 43%.
Then you’ll need to determine what kind of down payment you can produce. Traditionally, this is around 20% of the total cost. There are, however, options for lower down payments, which you’ll want to explore.
Note that a lower down payment may incur greater monthly mortgage payments and potentially lender’s mortgage insurance (LMI) costs.
Other expenses to plan for include:
- property taxes
- homeowner's insurance
- utilities and maintenance.
We advise setting aside a sizeable emergency fund to cover any unexpected repairs that may arise.
In addition, it’s crucial to assess your job stability and future income prospects. A stable income ensures you can meet mortgage obligations consistently. Home buying is all about long-term planning, backup plans and general security.
It’s always worth calculating the overall cost of buying versus renting too. The latter is generally more financially viable, particularly if you are unsure of long-term plans or the real estate market in your desired area is highly competitive.
How to assess a location
Location plays a prominent role in determining the following:
- quality of life
- investment potential
- daily convenience.
Besides affordability, there are many practical considerations you’ll want to factor into your research before deciding on where to buy.
The first and most obvious is proximity to everything you need. For starters, look into local grocery stores, medical facilities, schools, and public transportation. Research the property's distance to your workplace as well. A lengthy commute can significantly impact your daily routine and quality of life.
Overall, a convenient location can save time and enhance daily living. Part of this is researching the neighbourhood’s safety and crime rates to ensure your family's security.
For investment purposes, look into the surrounding infrastructure and development. Areas with upcoming infrastructure projects, new businesses or improved transportation connections tend to appreciate in value over time. The inverse is true for areas with stagnant development.
On that note, find out what you can about property value appreciation in the area.
In terms of personal preference, determine how you feel about the area’s overall character. Some might prefer a bustling urban environment, others a quieter suburban atmosphere. Consider your lifestyle preferences and how well the location aligns with them.
Looking at design and functionality
Potential homeowners should aim to achieve a balance between design and functionality. Design elements contribute to the space's aesthetics and ambience, while functionality focuses on how well the home meets your practical needs.
The layout and flow of the house are your first consideration.
An efficient layout ensures seamless movement between rooms and optimises space utilisation. Consider the placement of bedrooms, living areas and the kitchen in relation to your daily routines.
In addition, do your best to review the quality of construction and materials used. The foundation, plumbing and electrical systems are key areas to look out for here.
A well-built home minimises maintenance concerns and adds longevity to your investment. If you’re a little lost in this area, professional property valuers in Perth are trained to review the quality of a building’s physical characteristics, as well as the market and area surrounding it.
Consider your personal style and whether or not the design elements align with it. It’s true that trends tend to evolve, so try to choose something that both resonates with your preferences and can stand the test of time. This is also an area worth consulting a professional if you’re unsure.
Finally, consider energy efficiency and technological integration. Modern homes tend to include sustainable features like energy-efficient appliances, insulation, and renewable energy sources.
When the time comes to buy, consider reaching out to your local valuation firm to assess your potential new home.