Don’t beat the Jone­ses

The Weekend Post - Real Estate - - Front Page - Bianca Kee­gan

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.

Pic­ture: THINKSTOCK

Pres­sure: For­get about keep­ing up with peers.

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