Failing to plan is planning to fail.
Article 3/6 in our First Home Foundations series.
Most people when they think of their first home dream of a yard for the kids, family dinners, and a man cave for Dad. Whilst this is certainly where we want to end up, if you want to get there, you are going to need to get your metaphorical house cleaned first.
For the past 50 years, property prices have gone up, block sizes have reduced, and affordability has moved outwards.
This is nothing new.
What’s new is that, for the first time in 11 years, interest rates have increased consecutively 10 times, and inflation is at its highest rate since 1982. Most of us have never witnessed such conditions in our lifetime. The immediate and extremely painful impact of this is that a dual-income couple on good money has seen their purchasing power eroded by over $250,000 in less than a year.
If you want to get a home loan approved, there is very little margin for error and the key to your success is going to be your ability to prepare.
This can be overwhelming.
There is so much to know when it comes to buying a home and First Home Buyers find themselves at the bottom of the totem pole. For people who work in real estate and finance, a First Home Buyer represents a huge amount of work for comparatively very little reward. A lot of the time when a first home buyer gets told ‘no’, the person saying it actually means ‘I can’t be bothered’.
Harsh but true.
In order to be successful, what a First Home Buyer needs is to plan, strategise and execute. If you can get this right, not only is buying a home possible – it’s simple, it’s easy, and it’s fun!
To illustrate this, I’ll tell you about 2 clients of mine, Nathan and Rachel*. Nathan and Rach had 2 kids. Nathan was the major breadwinner with Rach working part-time. They serviced well (how much of a loan they could get based on their income), but everyone kept telling them they couldn’t help. They were beside themselves. As part of our ‘Finance Ready’ program, which all clients go through before talking with brokers, banks, or developers, we discovered Nathan had a default on his credit report. This default brought his credit score down to 270, (most banks require a minimum of 550 to 600), which meant he couldn’t get a loan anywhere.
Rather than saying no, we investigated the default. It turns out it was from a previous marriage and we believed it had incorrectly been put on his credit file. Our team negotiated with a lender on Nathan’s behalf and got the default removed. This boosted his credit score up to 650 and we were able to get them a loan so they could start building memories in a home they love.
This isn’t an isolated incident. We see this all the time wherein a First Home Buyer with the right preparation can get a home when they had previously been told no.
If you are looking to buy a home and want to get prepared, I recommend the following;
1. Get your credit file
2. Read this article on getting a loan approved
3. Put together your team (next step in the foundations)
4. Put together a plan
You wouldn’t go on a date without brushing your teeth and combing your hair and similarly, you shouldn’t be talking to banks, brokers, or developers without having your ‘house’ in order first.
With the right preparation, first home buyers will realise that not only is buying a home possible, it’s simple, it’s easy, and it’s fun.
*not their real names, I always call them Nathan & Rachel 😊
