First Home Buyers
Mastering the financial challenges
Many first home buyers commonly face a number of key financial challenges when it comes to both securing a mortgage approval and then managing their home loan in the first two years of ownership.
Some common barriers explained
Affordability vs. Approval Confusion
The challenge: Many buyers assume that if a bank approves their loan, they can easily afford it.
How this becomes a problem
- Banks assess your ability to pay on stress tested interest rates and their version of your lifestyle, not yours. What your actual budget will look like can be very different.
- First home buyers are often emotionally fuelled in their desire to own a home which results in overlooking the preparation for the true costs of home ownership.
- Financial stress and anxiety is often experienced putting pressure on life in the first two years particularly when changes in circumstances occur and haven't been carefully planned for.
How we help
By partnering with Reach Up Financial Coaching we help you properly assess your ability to service your mortgage and other debt commitments with our realistic affordability check not just rely on your bank approval.
Upfront and hidden costs
The Challenge: Many buyers underestimate or overlook these costs
Common surprises include
- Legal fees, LIM reports, builders reports and valuations
- Moving costs, set up costs (curtains, appliances, garden or landscaping etc)
- Insurance premiums, rates (sometimes payable upfront)
- Lenders mortgage insurance (when applicable) or low equity fees.
The Impact:
Every additional cost eats into any left over savings or emergency funds you may need in the early stages of moving in and getting settled. Without a buffer relying on further debt often becomes the only solution.
How we help:
By partnering with Reach Up Financial Coaching we help you gain clarity on what the first couple of years will look like for you so you can be better prepared to navigate the unexpected.
Lifestyle Creep and Budget Blowouts
The challenge: Managing income and expenses after settlement.
Why this happens:
- Many first home buyers feel like they have made it and splurge out on furniture, minor renovations and other 'nice to do' things too soon.
- Adjusting to mortgage payments when previous rent payments were a whole lot less (or no cost because of living with family) isn't always an easy transition.
- Having no strong and clear financial plan in place often results in over extending their debt commitments with credit cards and personal loans.
The impact:
Increased financial pressures place strain on relationships and lead to reactive financial decisions often compounding the pressure. This can cause people to feel out of control increasing the stress that now flows into other areas of their life.
How we help:
By partnering with Reach Up Financial Coaching we assist you to create a clear roadmap that you can keep yourself accountable to. This helps you avoid unnecessary stress and stay intentional with your financial decisions ensuring your other financial goals also become achievable.
At first I was reluctant to reach out but being declined for a home loan because of my short-term debts, my advisor told me I needed to do something.
Not only did going through the program help me understand how to protect myself from getting back into the same situation later, I got my home loan approved 4 months later even though some of my short-term debts still hadn't been completely paid.
I can truely say that if I hadn't done the program I would still be stressed financially and renting instead of now being in my own home.
Your program changed my future, thank you so much.