REVEALED: 22 per cent of home buyers blow their budgets
ALMOST a quarter of home buyers are spending over their limit when buying their new property, a survey has revealed.
The survey, by lender ME, found 22 per cent of home buyers had exceeded their limit.
Of those who went over budget, 46 per cent exceeded it by $30,000 or more, 30 per cent exceeded their budget by $50,000 or more, and 10 per cent exceeded their budget by $150,000 or more
The most common reasons for exceeding their self-imposed limit were:
- Falling in love with the property (52 per cent)
- Underestimating the budget required (28 per cent)
- Impatience (20 per cent)
- Underquoting by an agent (15 per cent)
- Getting caught up in a bidding war (12%).
Going over the budget had consequences for most buyers.
Financial goals were impacted, changes had to be made to current spending patterns and others were left emotionally stressed.
ME Head of Home Loans, Patrick Nolan, said it was important to stick to a spending limit.
"When it comes to spending within your means, there are two points during the home buying process where you need to get it right," he said.
"The first is when you calculate what you can borrow and while your bank is legally obligated to only lend an amount you can afford to repay over the life of the loan, including at a higher interest rate, it's your responsibility to ensure the information you provide them, particularly your expenses, is accurate, so they can make an accurate long-term assessment.
"The second point is at the moment of purchase where it's the responsibility of the buyers to remain within their set spending limit, particularly if that limit is based on the maximum amount that can be borrowed from the bank.
Strategies to help stay within budget
. Stay patient - there will always be another property
. Keep your feelings in check and if you can't, remove yourself from the situation by organising someone else to do the purchasing for you, either a family member or friend, or even a professional buyer
. Change your buying criteria, including size, location, or style of property.