Don’t beat the Joneses
BUYING a plush pad to impress friends is a pressure for one in five Australians, a new report has revealed.
According to a survey conducted by home loan and finance comparison company Finder.com.au, one in five people admitted to feeling pressure to buy a bigger home than their friends’, and one in 10 worried about not living in an area with a good reputation.
Publisher Jeremy Cabral warned that people should take into account more than the opinion of their pals when purchasing a home.
‘‘Purchasing your first home is an exciting time and it’s easy to get distracted by other people’s opinions or feel pressured to purchase a place that will impress others or make them envious of you,’’ he said. ‘‘The reality, though, is that first home buyers need to consider the cost of keeping up with the Joneses and whether they can afford the repayments on a bigger property in a more highly desirable area.
‘‘Rushing into a decision like this can end up costing first home buyers gravely down the track.’’
Mr Cabral said first home buyers were more likely to be tempted into buying their dream home first.
‘‘They should consider something more in line with their current budget to get them on the first rung of the property ladder and then buy bigger once the equity on the place builds up.’’
He said first home buyers should be aware of crucial factors including their budget, how much they can borrow and mortgage repayments before signing a home loan.
‘‘We all want our dream home and by taking a sensible and considered approach to getting on the property ladder, there is no reason why this can’t be achieved.
‘‘But jumping into a massive home loan to impress others is not advisable,’’ he said.
According to the latest Australian Bureau of Statistics, first home buyers accounted for about 14 per cent of all home loans issued in March this year.
The Reserve Bank left the official interest rate on hold earlier this month, which is sitting at a historic low of 2.75 per cent.
Step one: Calculate how much of your income you can spend on a property.
Step two: Work out mortgage repayments required for the loan amount and what you will have to pay each month.
Step three: Don’t sign up to the maximum loan amount – borrow less than what is offered.
Step four: Consider home loan market growth. Compare all home loan options before signing on the dotted line.
Pressure: Forget about keeping up with peers.