Should I buy the most expensive home I can afford?

Buying a property can take a lot of time and energy and so it’s understandable that many home purchasers hope to buy a home they can remain in for the foreseeable future.

This is why so many first home buyers try to push themselves to afford the biggest and best home possible, saving them from the hassle of having to move again down the track.

But is it wise to extend yourself to afford the most expensive home in your budget? Or should you be more conservative in your approach?

Figure out your priorities 

Buying an expensive property now could put you in good stead for the future, however stretching your borrowing capacity to the limit will leave you with little wiggle room in your budget if any unexpected expenses come your way.

You really need to assess your financial situation and ask if you’re willing to live frugally to afford the best property you can. This may mean that you need to give up some luxuries or put other investments or plans on the sidelines while you get ahead on your mortgage.

Will your circumstances change in the future?

You may want to consider where you are in your career or family life when deciding whether a property is right for you. If you are at the start of your career then your payments may become easier as you climb the career ladder.

If you plan on growing your family in the future however there is a chance that you may lose some income, or at the least have an extra expense, so you need to ask yourself how far you’re willing to stretch your budget.

Does it make sense from an investment perspective?

It’s always worth considering the investment potential of a property, even if you’re buying it with the intentions of it being a home. If you‘re looking to buy in a well-established area with good schools and facilities then the property is likely to always be in demand, and be more resistant to price falls.

If you move into an area with good schools your property may also be a good investment in your child’s future education.

Get advice!

When it comes to property there is no one-size-fits-all answer. The best thing you can do is talk to property and finance experts to figure out what is right for your situation. Ideally you should make sure you should make a purchase that provides you with a financial buffer in case of a rainy day or rising interest rates. If you stretch yourself as far as you can then you are taking on greater risk of future mortgage stress, however the greater the risk, the greater the reward can be.

Assess how much risk you’re comfortable taking on and what you want out of a property to help you decide what is right for you.

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