Getting Financially Fit for the Property Market
If buying a property is likely to be on your list of resolutions for the New Year, now is the time to start considering your financial fitness.
Just like getting physically fit, getting financially fit enough to purchase a property takes some good habits, a little discipline and time.
If purchasing a property is among your New Year’s resolutions, here’s the financial exercise regime you need to embrace.
Step one – Expenditure
The first thing you’ll want to look at is your current expenditure, as in what’s going out of your account compared to what’s going in.
Sit down and take a good hard look at your finances examining what’s necessary and what’s not.
Chances are you can curb a little in terms of entertainment, dining out and clothes purchases and the time to start doing that is now. While you’re at it, examine those subscriptions – whether it’s a gym membership or your Netflix subscription, what can go?
This step is really important because as a result of new lending criteria, banks are taking a lot closer look at discretionary expenditure. Often they’ll be looking at about three months of bank statements and exactly where you’re regularly spending your money and what habits you have.
Step two – eliminate liabilities
Ongoing expenses, like credit cards not only cost you money but are also considered a liability by the banks. So, where possible, it’s a great idea to eliminate them or at least minimise them.
The best advice is to get rid of extra credit cards and reduce the limit on the main one remaining. Also, try to knock out any additional liabilities you may have like store cards or interest-only purchases that you are still paying off.
That also goes for services like Zip-Pay and After-Pay. Then make sure you resist any offers like interest-only deals or buy now pay later schemes in advance of applying for a loan.
Step three – A budget
Once you know what’s going in, what’s coming out and what you can eliminate, you can set yourself a budget for exactly what you’ll spend over the coming months.
This budget should encompass everything, including necessary expenses, like electricity, phone bills, car maintenance, insurance and petrol, in addition to the remaining items of discretionary expenditure we mentioned earlier.
Although this budget should be able to account for almost everything you are likely to spend, don’t forget to set aside a little extra for unexpected surprises like new tyres or the little things that can soon add up.
Step four – Saving
When you understand your income, expenditure, have reduced your liabilities and created a budget, it’s time to look at that all-important area of saving. You might already have some savings accrued but with a budget and reduced expenditure, there’s a good chance you can channel further funds into your account.
Do this regularly and faithfully to illustrate to the bank you are a good saver who can work towards a goal.
The final word
The above are just some of the tips you can embrace to get yourself into solid financial shape in order to purchase a property in the coming year. But they’re not the only ones, and it could be worth checking in with your lending institution or a mortgage broker to understand your personal situation and the other actions you can take to achieve your property dreams faster.
Looking to buy or sell a property in the New Year? Why not chat with one our friendly Eview agents on 1300 438 439 to understand the options available.