Decision Made, What Next?!

Great, so I finally decided we were going to try to buy our own home sometime in the near future.

First step, attitude adjustment.... we were not going to 'try' we were going to 'do it' successfully :)

How did I start?  Well after I had my 'moment of clarity' back in 2006, I started to casually and randomly check out house prices around our area and other suburbs where I have lived previously.  The internet is an amazing tool and I think it has a lot to do with our final success.

I did not have to worry about finding time out of my day to go and look at property, I could just have a quick squiz online in my spare moments, usually late at night when the kids were asleep.  I did not look a lot but I had a vague idea of what was happening with the housing market.

I mainly looked at houses in those suburbs that I have lived in because I had a fair idea of the suburb position in relation to the city, to the shopping, public transport and other facilities etc. of the area, as well as what types of houses and landscape, also the general social perception of different suburbs.  I understood what you were getting, where and it helped me to make sense of the different property prices.

I should probably mention at this point that I have personally been renting for a long time, ever since I left home aged 17 years.  I added it up one day and worked out that I have resided in 12 different homes and I have rented with 26 different people!!!!  

This was across 4 different town/ cities in Australia but in Brisbane/ Ipswich in particular, I have rented in 7 different Southern and Western suburbs.  I have never lived on the North side of Brisbane but I do have friends who live there.

In 2006, we were privately renting directly from the landlord not through a real estate.  We were only paying $190/ week until late 2009, when the landlord decided they wanted to move back into their own property.  Fair enough but I got a real shock when I started looking around for a new place to rent!!!!

I quickly realised that most basic rentals, similar to our previous home were now being rented for $270- $290/ week and the newer homes were $300+

I decided to 'treat' us by applying for newer and fancier homes in the upper rental range around $310/ week.  This is because I knew we were planning to buy a home in the near future and I also knew that any home we bought would be pretty basic, to fit in our price range :)  I figured it could not hurt to live in a very nice place for awhile and as a practical test I wanted to see if we could handle paying a higher rent and still survive financially.

At this same time, rentals in other suburbs I had lived in previously were closer to $350 - $450 per week for the same kind of houses.

I amped up my internet searching for different properties and after 1 year of steadily checking and dreaming :), I started to get an idea of trends in the housing market and I had started to narrow down the areas that we were likely to be able to buy our first home.  

We had been living in our new rental for 1 year, when the 30 year floods hit Brisbane in 2011.  That decision to treat ourselves then turned out to be a very good decision for a totally unexpected reason!  I noted that all the rental properties in the $270 range that I had considered in my previous search went under in the floods!  I mean, completely under too... Going around looking at the devastation, I could not even see the roof of several of them.  The only good thing to come out of the floods, is that I got to see first hand which areas were prone to flooding and how bad it could be.

After the floods, housing prices in many places across Brisbane and Ipswich started to come down rapidly (not surprisingly), the interest rates were getting extremely low and I knew we were rapidly approaching the best time for my little family to buy.

So it is one thing to check out the housing market but you need MONEY to buy right?!  I had some shares that I bought before I was married and even though I had sold some of them to finance us when needed, I held on to 1000 of my best performing shares.  The value of those shares took a battering in the GFC, in 2004 they were worth $18 each but in 2010 they dropped to $5 each.

I had been saving whenever I could.  Nothing huge $50/ week for the last couple of years.  Saving is hard though because there is always some bill to pay and my savings fund went up and down at different times of year.  Sometimes, I could only afford to save $10/ week but I made sure I saved 'something' each week.

The Government introduced a new savings plan 'first home saver account', where they would match your savings $ for $ if you opened up an account only for home purchase.  This sounded great, except that you could only spend that money on buying a home.  My savings were more fluid than that, I have a family and sometimes you just have to crash your savings account to pay for something they need!

I opened an online ING account.  This was good because it had no card and it took 1 day to transfer the funds across, so you had time to think about whether you really wanted to spend the money or not.  It also had a relatively high interest rate and it was easy to manage the account.

I also tried to resist temptation whenever possible.  We had a couple of small televisions, when everyone else seemed to have massive screens.  I paid these off via 'lay-by' over several months, so that we owned it outright before we brought it home.  I also put the kids Christmas gifts on lay-by, going to the June toy sales.  I resisted buying expensive electronic equipment (even though it would have been nice to have).  I made what I had last.  

I also allowed myself to accept gifts of second hand furniture and goods which friends and family randomly offered to give away.  This can be really hard on your pride but the longer term goal was worth it!  FREE is not a dirty word!  All our furniture was old and second hand and a lot of my clothes the same.  Older but not dirty!  Still clean and nice.  

I even went around during the Council collections when people put their unwanted furniture and other rubbish out on the footpath.  The Council just crushes this stuff in their garbage trucks and it is destroyed.  This means that most people put their stuff out 1 week early and they are happy for anyone to come and take whatever they like from the pile.  If you go to the 'richer' suburbs, they often throw away furniture which is still nice, some of their 'rubbish' was nicer than what we already had in our home LOL.  One time I collected a dryer from the footpath, I took it to a small repair shop and $95 later, they had serviced it and it still works fine 2 years later :)

I also resisted reading the many sales catalogues that came to our home.  I only allowed myself to read them if we were looking for something in particular.  You will always find something you like in a catalogue, so I found the best way to avoid temptation, is to just throw them in the bin straight from the mailbox!

All these things to save money I had figured out on my own but how to translate this into being able to get a home loan from the bank was a mystery????!  I figured my current savings plan was going to take me 50 years to save up the deposit!

I started to talk to my friends who owned their own homes, to ask them what they did and how they went about it.  I will share what they told me in my next post :)