How far should I stretch myself financially to buy my first home? It doesn’t feel safe to push myself too hard. What if something happens and I won’t be able to continue repaying the mortgage?

These are questions we’ve been asked often. Having a mortgage can feel like an incredible responsibility and burden, but sometimes there’s a false economy in playing it too safe.

For example, if you buy something small and cheap but outgrow it really fast, you’ll incur a lot of unnecessary costs when you need to sell and upgrade. If you can stretch now and avoid a double move, then all the better.

If you’re a couple who haven’t yet had kids, stretching while you are both earning good incomes is always going to be easier than it will be after you have kids and prices have risen further.

One option is to buy a small house in a good location, just make sure it has potential for extension in the future (as long as you anticipate some promotions and pay rises in future years).

Or, if you’re single, buying a two bedroom unit might feel like you’re really pushing yourself too hard, but if you can afford it, two bedrooms gives you more options for the future - you can always rent out the second room and they tend to increase in value more than one bedders.

Avoid stretching for any property that is unlikely to grow in value in the short to medium term. House and land packages are traps for first home buyers and often capital growth is severely limited for many years after purchase.

Want to be an educated first home buyer? Check out our online course for first home buyers.

Avoid costly mistakes, make smarter decisions, and get into your first home sooner. Why waste time doing things the hard way?

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