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Home Ownership – are you ready?

18 August 2010
Young couple contemplating purchasing a home

Many young couples are keen to buy a home but can they afford the house repayments?

For many Australians, home ownership is a very important goal.

Answer these four questions to find out if you are ready for home ownership.

1 How much deposit do you have?

Not so long ago, banks and lending companies required home buyers to have a 20 percent deposit. This was the minimum that home buyers needed to purchase a house or other property. Banks and loan companies often require proof of a good savings record and proof of income that will allow a borrower to pay the loan. How much deposit do you have? Check with your lender about what they require from you before they’ll give you a loan (and how much they will loan you).

2. Can you afford the house repayments right now?

What is your current income and how does your income allow you to pay the housing loan without undue financial burden? Getting a housing loan on an assumption of future income either by way of a possible pay rise or other projected income can get people into trouble. It’s best to make sure you can fund your loan repayments and other property costs on your current income.

3. Can you afford your house repayments on one income?

Whether you are a young couple planning to have children or a couple in any stage of your relationship, pregnancy, retrenchment or other change in your circumstances might require you to make repayments on one income. If you can meet your repayments on one income, you know you will weather any future changes that leads to this situation.

4 Can you afford your house repayments if interest rates were to rise by four percent?

Interest rates vary according to the business cycle changes in the economy. In 2008 and 2009, the Reserve Bank of Australia raised interest rates regularly to help combat the Global Financial Crisis. Doing the Maths for some increase in interest rates and knowing that you could meet your house repayments will put your mind at rest when you buy your new home.

Read more about buying a home

Buying tips

Buyers’ guide to home auctions

Is it a good time to buy an investment property?

See current houses for sale with Liza McKilliam