If you’re hoping to buy a home this year, the start of a new year is a great time to set some home buying goals, whether that be to save a little more or to cut down on your spending. We’ve put together some New Year’s Resolutions to consider if you’re planning to buy a home in 2020.
1. Set a savings goal
The first place to start this year is setting a savings goal. Goal setting gives you something to work towards and helps you budget accordingly throughout the year to reach your goal. You could start by researching the market to get an understanding of the sale prices of recently sold properties in your ideal suburb. This will give you a benchmark of what you’ll need to save each month to get there.
Not only will setting a goal help boost your savings, you’ll also be able to show your lender (when it comes time to apply) that you have a savings history. It’s all well and good to have enough money in the bank for a deposit but if you can’t show the saving behind this then this could highlight potential difficulty making your loan repayments.
2. Improve your credit score
As part of the home loan application process, your lender will check your credit report to make sure you are a reliable borrower. If your credit score isn’t looking its best self at the moment, you can start making some financial changes now to help improve it over time. Paying your bills on time, paying off any outstanding debt and keeping your credit card balances low are all great ways to improve your credit score. Remember, there’s no instant fix but establishing good financial habits early will eventually outweigh any bad habits… like occasionally paying that water bill late!
3. Think twice about a career change
When it comes to New Year’s resolutions, a common theme tends to be around career changes. Whether it’s leaving your current job or switching careers entirely, the start of a new year often inspires us to think about where we see our career heading over the upcoming year. If 2020 is the year you plan to buy a home, but you’re also thinking of making a career change, it’s worth making sure your timing of job changing and home buying line up. Lenders can be hesitant to let you borrow money if you’ve only been in a role for a short time. For most occupations you must be employed in your current contract for at least six months or have been working in the same industry for over a year.
4. Take control of your spending habits
If the Christmas and New Years period has burnt a bit of a hole in your pocket, you might want to start reconsidering some of your future spending while saving for a house. Not only will unnecessary purchases limit your saving ability, it also might not look great when your lender reviews your account statements to check if you’re suitable for a home loan. Take the time this year to review your statements and make some changes to your spending. Can you live without your Netflix subscription for a few months or those new shoes you’ve been eyeing off? Making small changes to your spending early will put you in a better position when you’re ready to apply.
5. Do your research
Buying a house is no easy feat, especially when it comes to saving but also when it comes to the planning and research involved. The earlier you start this process the better prepared you’ll be when the time comes to apply for a loan and put in an offer to purchase a house. Over the course of the year, start researching the market, house prices, ideal suburbs and even visit some homes for sale to find out what you do and don’t want in a home. It’s also worthwhile to look into the additional costs involved in buying a house, what concessions you might be eligible for (e.g. The First Home Owners Grant or First Home Loan Deposit Scheme) and also the home buying process in general to give you a good understanding of what’s required of you.
The home buying journey can feel daunting at times but with a few changes to your spending habits, some research and a bit of New Year motivation, 2020 could be your year.