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Tips for first home buyers
Source: Herald Sun
Wendy Mason, December 04, 2007 12:00am

BREAKING into the property market can feel a bit like climbing Mt Everest.

House prices and interest rates seem to keep rising faster than it's possible to stash money away for a deposit. But there are things you can do to get a roof over your head and meet the repayments.

Work out a budget

Discipline and research are the keys to saving a deposit and meeting mortgage repayments according to HLB Mann Judd partner Matthew Gardiner. Without savings discipline, first homebuyers will find it difficult to buy a home or to take advantage of the new Federal Government's proposed First Home Saver Account.

The scheme, to help young people get into the property market, is based on a very simple idea - save and don't spend. The home saver account plan would allow first home buyers to commit additional savings into a first home ``superannuation-style'' saving account that can be accessed after four years to help towards a deposit on a first home. A cap of $10,000 (indexed) will apply to total contributions each year. “Although these promises may benefit those who are committed to working hard, budgeting and saving, they won't help those who have become used to an environment of easy credit over the last 10 years and have never before had to save,'' Mr Gardiner said. The first step to owning a home is to set a budget - work out what you spend and where and how much you can save.

Avoid other forms of debt

``If you must have a credit card only spend what you can afford to pay off within the month to help avoid interest charges,'' Mr Gardiner said. Potential interest rate hikes also need to be factored in. Most people who are currently having their homes repossessed were only just getting by'and couldn't afford any increased payments, he said.

Be realistic

The order of the day is to "compromise'' said Wakelin Property Advisory director Monique Wakelin. Unfortunately, first homebuyers have very high aspirations and, in many instances, are unwilling to adjust their expectations. "The first home never is, and never will be, the dream home. The first home is just to get a foothold into the market. If you get to your dream home it's going to be in a couple of steps,'' Ms Wakelin said. Deciding if the property is for lifestyle or for capital growth in the short to medium term determines where you look. Choosing lifestyle usually means sacrificing the location to get a bigger home.

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