Help me work out my home loan requirements

It’s important to think about what you really want and need before the emotion of the house hunt or choosing a building design kicks in. That’s not to say your heart isn’t important when it comes to your dream home, just that it pays to start with your head.

There are a variety of factors to consider, including: 

• If this is not your first home, why are you moving? What don’t you like in your current house and/or neighbourhood?
• Are you upsizing or downsizing?
• How many bedrooms and bathrooms do you want? How many do you need?
• Are children (or more children) likely to come along? Or leave home?
• Would you like to be able to work from home?
• Is it important to be close to work, schools and shops?
• Do you want to stay near or move closer to family and friends?
• Or do you need to get away from them?
• Would you like a backyard and a garage?
• What level of energy efficiency are you looking for?
• Do you want rainwater tanks and landscaped gardens?

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Stay focused and realistic 

The questions are the same regardless of whether you’re buying an established home, building a new home or undertaking a major renovation. Of course, building or renovating gives you a unique opportunity to incorporate all your dreams and desires, so you’ll need to give even more careful consideration to the materials and finishes you want. 

Regardless of whether it’s your first purchase or your fifth and how big or small your budget is, it’s important not to get too carried away. There’s a big difference between wants and needs, and you’ll almost always be forced to make trade-offs along the way. Stay rational. 

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Investment properties 

Another very big question is whether you intend to live in the property or rent it out, and once again you need to keep an eye on the future if you want to avoid costly mistakes. 

If you’re purchasing an investment property, or you’re purchasing to live in now but will rent the property out in years to come, you need to consider your requirements from a completely different perspective and consider the following questions: 

• Which areas are in highest demand?
• Which areas are popular with the types of tenant you want to attract?
• What do similar properties rent for in the same area?
• Do you want something that’s ready to rent, or needs renovations?
• Are you looking for a low-cost/low-maintenance investment?
• Will it always be a rental, or would you eventually like to move in?
• If one day you’d like to move in, is the neighbourhood one that you want to live in?

Choosing the right rental property depends on what’s most important to you – yield, capital stability and ease of maintenance are all important considerations. If you’re also going to live in the property at any time, the balancing act becomes even more difficult.