Property buyers blowing budget
A RECENT survey by lender ME revealed 22 per cent of home buyers exceeded their spending limit when they purchased their most recent property.
Of those who went over budget, 46 per cent exceeded it by $30,000 or more, 30 per cent exceeded their budget by $50,000 or more, and 10 per cent exceeded their budget by $150,000 or more
The most common reasons for exceeding their self-imposed limit were: falling in love with the property (52 per cent); underestimating the budget required (28 per cent); impatience (20 per cent); underquoting by an agent (15 per cent); and getting caught up in a bidding war (12 per cent).
64 per cent of those who went over their budget admitted some kind of negative consequence as a result.
For instance, 28 per cent said their overspending impacted other financial goals, 27 per cent said they had to make changes to current spending, and 24 per cent said they experienced emotional stress as a consequence.
The survey also showed buyers are basing their personal limits on a variety of factors.
The most common basis for spending limits was what people were comfortable spending to avoid too much debt (55 per cent), other financial commitments (52 per cent), the maximum they could borrow from their bank (46 per cent), while 45 per cent based their budget on what they thought was the market price.
Some strategies that can help you remain within your property buying budget include:
- Stay patient – there will always be another property. Keep your feeling in check and if you can’t, remove yourself from the situation by organising someone else to do the purchasing for you, either a family member or friend, or even a professional buyer. Change your buying criteria including size, location, or style of property.