Buying property where you can afford
This article is part of a fictional case study series following "Sarah", a typical first home buyer in Victoria. Read each article to follow "Sarah" through a variety of articles exploring issues related to buying a home.
As Sarah kept running the numbers over and over one night, she got frustrated. Even though she had $50,000 to put towards a house, she just didn't seem to get a straight answer on how far that could go.
Of course, she wanted to buy where she could afford. But...how could she know how to do that? Her $50,000 was 10% on a $500,000 property, or 20% on a $250,000 property.
After a while, she came up with a checklist to see what she could afford. After all, the amount of money you have is only one part of the equation. This is what she did:
- First, she figured out her absolute limit. For her, that was $500,000.
- Then, she did her research. She spoke to real estate agents and figured out where she could find reliable properties for under that amount.
- She started looking at houses that were selling for around the $440,000 - $460,000 range. That meant she had a little bit of wiggle room in case prices were to rise.
After extensive research, Sarah decided on a three-bedroom home in the northern suburbs, close to infrastructure, schools, and public transport. While it was a little further out than she wanted, the lower prices meant she’d be able to cover the mortgage – and still live comfortably.
Looking to where you can afford may simply mean looking further out. But over time, that wise investment will allow you to upgrade your property journey soon enough!
Running all these numbers can seem overwhelming. But the more effort Sarah puts in now, the easier it will be later on.