The guideHaven't started2 min read
Are you ready for this journey?
A worksheet for the why, the when, and the why-not. The emotional part is the expensive part.
The hunt for a home is emotional, and emotion is what makes people pay too much for the wrong property. The defence is deciding what you want while nothing is at stake, writing it down, and reading it back when you're standing in a place you have fallen for.
Clarify your why
- 1What is this purchase for? Somewhere to live, an investment, or somewhere to live in now and rent out later. Pick one.
- 2If it's somewhere to live: what does it have to do for you? Location, space, the commute, the schools. What would you give up to stay in budget, and what would you never give up?
- 3If it's an investment: are you willing to buy in an area that stacks up on the numbers but that you wouldn't choose for yourself? Can you handle a tenant, or will you pay someone to?
- 4What's the financial goal? Lowest possible repayment, best rental yield, best growth prospects, or simply getting in as soon as you can. These pull in different directions.
- 5Why now? Write the honest answer. "Everyone keeps asking" is a reason, but it isn't a good one.
And your why not
This is a large financial and emotional commitment, and being clear-eyed about the risks is how you plan around them rather than being surprised by them.
- It ties up cash you may want for something else. Keep an emergency fund outside the deposit; three to six months of living costs is the usual advice.
- It makes you less mobile. Selling costs money and takes time, so a job in another city gets harder.
- Repayments are not fixed forever. A variable rate can move, and a fixed rate ends.
- Maintenance is now yours. Budget for the hot water system nobody thinks about until it goes.
Before you move on
- You've written down your main purpose for buying
- You know what you'd compromise on and what you wouldn't
- You've named the risks and how you'd handle each one
- You have a target date, even if it's years out