Everyone dreams of buying their own home at some point in their lives. But for most people, it can remain an impossible dream simply because the costs are too much or that they dread the prospect of securing a mortgage.
However, the need for a mortgage doesn’t have to be a curse or even a dream that’s never realised. Property ownership should be a rewarding experience.
An important part of home ownership is first acquiring the means to purchase and pay off your house. This can be the ultimate test of your financial handling skills and quite a lot of people will find themselves in the situation of not being able to proceed because they don’t qualify for a home loan.
So let’s start with two financial challenges that will have the most impact when trying to qualify for a mortgage. It could be either.
A: You have a good income but you don’t know where it all goes after payday.
B: You are still dealing with past decisions that left you with debts you have to pay off.
Of course, there is a lot more involved and a mortgage broker can help you with this however there are still a few requirements when applying for a mortgage.
- Three months of reasonable spending habits and regular savings.
- The adequate funds for a deposit.
- Your ability to make the repayments.
If you earn a good income but not sure where all your money goes, it isn’t impossible for you to purchase a home. It is only a matter of needing better planning and money management skills.
If you’ve racked up some debt and don’t have the best credit rating then you will also benefit from improved money management skills and an accountability coach to keep you on track.
One of the fastest ways to prepare yourself for home ownership is to invest in a Spending Planner., who is an expert in cashflow forecasting. They’ll help you set yourself up to buy a house and still live a decent life.
The best way to prepare yourself is to get a feel for what it’s like.
In other words, live like you already have a mortgage.
- Contact your local mortgage broker and find out how much you could potentially borrow given your earnings and how much you’ll need for a deposit and fees.
- Create a spending plan using this information in combination with your current living expenses. The difference will determine the extra amount you will need to put away to meet a future mortgage. This additional money can be put into a savings account that will eventually help fund your deposit and fees. The added bonus here is that you will be able to demonstrate to lenders your reasonable spending and ongoing savings habits.
If you don’t know how to create a Spending Plan or are struggling to stay on track with any financial plan, contact a Spending Planner who can get you on target and stay that way.
They can also help you go from short-term financial plans to bigger, long-term financial strategies that include building an emergency fund that has 3-6 months’ worth of expenses in it. (On a side note: You definitely do not want to confuse an emergency fund with your home loan deposit!)
The Spending Planner will teach you how to use specialised budgeting software that offers 10 years of cashflow forecasting. You’ll be prepared for any bumps in the road and most importantly, you will know when any tough times will be coming to an end.
Owning a home can be one of your life’s greatest achievements. Make it the blessing it was meant to be and don’t give up on your dream yet when there’s help available.
About Amira MacCue Founder of Your Money Habit
The Money Finder & Mum, Inspiring positive change and success in people’s lives.