Buying a property for the first time is a big expense and one that not many will be able to afford in their lifetime. However, if it’s something that you really want to achieve in your life, then it’s important to get your finances in order to make it as much of a realistic outcome as possible.
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While it might not seem doable just right now, it’s something that can certainly be attained with a lot of perseverance and hard grafting. With that being said, here are some top tips for getting your finances in order to buy your first property. Whether this is alone or with the help of a partner or friend, it’s an achievement that’s certainly worth celebrating.
6 tips for getting your finances in order
How do you get your finances in order so that you can get that one step closer to buying a property? Here are 6 tips for getting your finances in order.
- Evaluate your finances
First and foremost, evaluate your finances. This is something you’ll want to do prior to saving because you want to know where you’re at currently and where you need to be in order to buy your first property.
Take a look at the situation that is your finances. Perhaps you’re trying to buy with another person, whether that’s a partner, family member, or friend. Their finances will also come into question so you want to make sure that the person you’re buying with is a stable partner in your investment.
After all, you’ll be responsible for making payments back on the loan you borrowed to buy the home. That might not be possible to do so alone if suddenly the other person can’t make the payments each month.
Be sure to evaluate your finances and consider strongly whether or not you can take on the expense of not only spending money on a property but also being able to afford the expense when you’re moved into it.
- Create a budget with a spreadsheet
A budget is the next thing you want to focus on when it comes to getting your finances in order. Why? Well, if you’re not used to saving money or even knowing what goes in and out of your account, then a budget is key.
When you have a budget, you’ve got some direction and a clear understanding of what you have available at the end of each month to spend on yourself and more importantly, to save.
Creating a budget is pretty easy to do yourself from scratch. However, if you’re struggling to do this, then it’s a good idea to get a template online and copy this into a spreadsheet. That way, you’ve got a structure to work from, which you can then customize to make your own.
Use something as simple as Google Sheets or Microsoft Excel to assist with budgeting for your first property.
- Have a goal to reach
A goal is very much important in the process of trying to save for a property. Goals are a great motivator and it’s something many people use when they’re trying to save, especially when buying a property. Many people will also use goals for their own careers and for other areas in their personal life.
Having a financial goal is going to give you a realistic outlook of how long it’s going to take for you to save your part of the money or all of the money if you’re buying alone.
Make sure that you’re factoring in the down payment and any other additional fees that you can currently estimate. These might be legal fees and other fees added to your borrowing.
- Cut out any luxuries
Luxuries are something that we all have and it’s not just material things that cost a fortune. A luxury is anything that you could live without, like a gym membership or a subscription to Netflix.
While these luxuries may bring you a lot of joy and happiness, some of them might be severely setting you back from saving more money each month. Many gym memberships for example will cost upwards of hundreds of dollars and that money could be temporarily shifted to save into your savings for the property.
- Pay off any outstanding debts quickly
Make sure that you’re paying off any outstanding debts quickly in order to get those finances in order. There’s nothing worse than having outstanding debt which goes against your borrowing power and ability to buy a property as a result.
Consolidate your debts if you haven’t already so that you’re paying them all off from one place. That way, you avoid any late fees or interest fees that could be prolonging your ability to pay it all back in time.
- Speak to a financial advisor
Speaking to a financial advisor is definitely worth doing, especially when it comes to buying your first property. It’s particularly effective if you don’t have much experience in saving or budgeting your money. A financial advisor can be helpful in understanding what you need to change when it comes to your spending or saving habits.
Those financial advisors with specialist knowledge in property buying are useful to source so do some digging to find the best options.
What you need to buy your first property
If you’re looking to buy your first property, then it’s important to know what you need aside from the money of course.
Know what loan providers are available
There are a lot of loan providers on the market that will be able to provide you with a loan to cover the rest of the home purchase if you can’t afford to buy it outright. It’s worth doing some shopping around to understand what options are available and which ones are the best for you and anyone who might be buying the property with you.
Take a look at your credit score and credit report
Your credit score and credit report are useful to have access to because they will determine which loan providers will actually lend money to you. The better your credit score, the more options you’ll have that will be more cost-efficient as a result.
If your credit score isn’t looking too good, then you’ll want to improve this before attempting to buy a property.
Save money for both downpayment and additional fees
When it comes to saving money for a downpayment on a home, you also don’t want to forget about the additional fees that come with buying a property. Legal fees are going to need to be paid for too, as well as any extra fees or administration fees that are needed to process the property sale in full.
You may also want to look into buying schemes in existence or hopefully coming into existence like the $25,000 first-time home buyer grant application from the Biden administration.
Start shopping around for properties
To help figure out what property you want to end up in, it’s important to start shopping around. Everyone is different in their preference and needs for a property. Some might need a bigger property to house all of the family households. Others might only need a small studio apartment or one-bed apartment because it’s just one or two people who are moving in.
Once you’re close to having the money ready, start shopping around for the properties that are available on the market.
Be realistic with your pricing and budget
It’s important to be realistic in your pricing and budget when buying for the first time. Buying a property for the first time is not just about the big expense, to begin with but maintaining the payments needed on the home, as well as all the additional bills you might not have had before.
With that being said, it’s important to be realistic with your pricing and the budget you have available. The last thing you want to do is to look at properties that you can’t afford to buy. That’s only going to be disappointing for you.
How to choose a home for the first time
How do you choose the right home for you? Here are a few questions and factors to consider before you sign on the dotted line and hand over your hard-earned cash.
- Are you looking for urban, rural, or suburban locations?
- What sort of commuting time do you need?
- Transport links
- The proximity of shops and restaurants nearby
- Quality of schools and other educational institutes in the area
Choosing the right home is important because although this is your first and perhaps not your forever home, it’s one of the more meaningful properties that you’ll be buying. With that being said, you don’t want to rush into the process and end up buying a property that you can’t afford to continue living in or was in the wrong area for you and your needs.
Hopefully, with these tips, you’ll be able to navigate buying a property for the first time with more ease. Use these tips to get yourself one step closer to a property investment of your dreams.
This is a contributed post.
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