Category: Aggregate This

Be sure to read the overly long winded “When to buy” post first if you care about this stuff.

I think it’s very important that people enter into property buying with their heads and not with their hearts. Property is much like gambling in that there is often some game theory going on… you like a place but don’t love it, should you buy it and risk not being happy, or not buy it and risk it being sold and not finding anything else?. This stuff is stressful and you’ll probably find yourself lying awake at night with your mind running through all the variables… Having said all that, there is one thing you need to do right from the very beginning and then never budge on it: Set a price and stick to it.

Getting to that price is easier said than done… Here’s the steps you should probably follow:

1. First you need to know what the bank will give you. A place like Ooba is a good start. Be prepared for a little bit of paperwork.
2. Next you need to know whether you can afford the repayments. A spreadsheet and budget will help you here. It’s imperative that you be realistic and conservative. Find out what you’re paying on bank charges, go through your credit card statements, include EVERYTHING… Perhaps start keeping your pick ‘n pay receipts so you know how much you really spend on groceries. You’ll want to be in a position where you can make your payments (at 2% or 3% higher interest rates) and live comfortably.
3. If you’re like us you’ll notice that the banks are quite happy to offer you much more than you can probably afford. We qualified for about 250k more than we ended up buying for. Based on your budget figure out what payments you can make comfortably and work out what your total bond amount would be based on those monthly payments. I like this bond calculator. Ask you bond originator what interest rate you should do your calculations on. They’ll probably give you an accurate conservative figure. If we had bought on the limit we qualified for our quality of life would have decreased significantly until one of us got a raise… not something you want to bank on… and we would have been up shit creek if the interest rate went up by 2%… something that you unfortunately need to bank on. (It probably won’t happen, but you need to bank on it)
4. Once you’ve got your final number you can start looking for a property. That’s step 3 which is coming soon.

over and out.

j.

Just thought I’d write a little update since everyone is asking.

We got the house! It’s about 107 years old and in perfect condition except for the bathroom which could do with some love. There is a tenant in the house already so we’re going to maximize on our existing leases and only move in during the month of December… The wait is killing us but it’s also giving us lots of time to look for bathroom fittings, tiles and other similarly domestic things. The one thing I’d always wanted was a house with a fireplace (preferably a little Dover stove) and now I have one! We’ve also been planning our herb garden which I think is going to be a tiny piece of awesome. My biggest concern is the audio visual wiring. I plan to run RJ6 coax and BNC wall boxes, with BNC to Belling Lee fly leads and an RF Modulator so we can watch stuff off the Xbox in the bedroom 😉 Nerd much? The rest of the house will be covered by 802.11n/g/b wifi. How much does a 15″ touch screen cost? I’m thinking of turning my Alix into a “kitchen pc”. 🙂

I can’t wait to get in there with a drill and a flipping screwdriver.

Life is AWESOME.