Is now a good time to buy a home?

With interest rates at a new high, many nervous buyers are abandoning the real estate market and the media is shouting about it.

Clearly fears centre on just how high mortgage payments will go and these are being amplified in the popular press.

However, with Reserve Bank signalling it may move on interest rates more slowly from hereon, there may be an opportunity to get into the property market so get out your calculator and let’s have a look.

Remember, experts say the time you get into the market is less important than time in the market.

In other words, holding property over the long-term can prove a worthwhile investment, if you do your homework, especially when money in the bank is being eroded by recorded inflation.

We now, right! Even interest rates that now hover at 2.75% can’t keep up with price increases that are over 6%. It’s crazy.

So, if you are thinking about buying a home right now, here’s some of the things you should ask yourself:

1. Can I afford the mortgage repayments, and could I afford them if they went up another three or even four per cent? You can use a mortgage repayment  calculator to see what payments would look like.

2. Would buying a home use all my money, or would I still have an emergency reserve if I needed to bail myself out of trouble? It is never a good idea to spend every cent you have on a home. You need to shop under your maximum capital. Ideally, you should retain an emergency fund equal to at least three months’ living expenses.

3. What area that is suitable for me is likely to hold its value? Some markets are on the downhill slide but getting the location right means a surer investment. Remember, always buy the worst home in the best street, not the other way around. It’s sensible to do all your research around a suburb on sites such as  www.realestate.com.au and www.homely.com.au, as well as attend auctions to watch prices and gage competition. Become an expert in your market.

4. Can I buy under asking price, for example, in a sale that is being forced because the owner didn’t take into account the real cost of owning a home in this market?

5. Besides mortgage repayments, what other costs will I have to meet? For example, stamp duty, council rates, strata fees, water rates, insurance, repairs and so on.

6. Do I qualify for any First Home Buyer assistance? This varies for different state and territories buy can include stamp duty discounts and more. You’ll find plenty of information online but a mortgage broker can also help.

7. Am I confident that I have a secure income or job?

8. Am I looking at the property as a long-term investment to minimise tax and add value to my asset portfolio, not a short-term win?

Ideally, the answer to all of these questions will be yes, but a conversation with your accountant, or your financial adviser, can help you get a clearer picture of your financial situation and your potential to build wealth.

Older women are over-represented in the number of homeless but being able to afford your own home can give you a level of security that you will not only appreciate now, but in years to come.