Buying a property can be overwhelming for someone new on the property ladder, but don’t let that deter you.

Here are three questions millennials should ask themselves to get organised and develop a strategy.

1. Am I still paying off debt?

Applying for a home loan doesn’t happen in a vacuum. There are moving parts to every person’s financial situation, and things like existing debt and available savings should be taken into consideration before jumping into the housing market with both feet.

To improve your borrowing capacity, it’s important for anyone with existing personal loan, car loan, credit card or ‘buy now pay later’ facility to pay down or close them if minimum balance is outstanding.

Remember, you still need to accumulate a deposit for your home so, do a budget to work out what extra funds you can redirect towards making extra repayments for your existing debt. A quick way to increase your cashflow is taking your own lunch to work, rather than buying. This could easily give you an extra $75 per week and with a short-term sacrifice, you can reduce your existing debt and improve your borrowing capacity quicker.

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2. What are my goals?

Spending and saving with intention are the foundation of good money management. With well-defined goals, it’s much easier to make a plan and follow through with it.

Before you get into the nitty-gritty of home loan options and what type of property you want to buy, ask yourself: What are my goals?

With clear objectives for your money, you can evaluate your time horizon for buying a property. You can also consider how long you would prefer to own the property you buy, is it going to be a stepping stone to your dream property or are you wanting that from the start?

3. How much can I afford to contribute?

A lot of millennials get tripped up on exactly how much savings they need to have in their accounts before applying for a home loan. Lenders are not interested in how much you intend to have saved up by the time settlement date arrives.

Not only you need to have saved a minimum five percent of your proposed purchase price, you need to factor in cost associated with buying a property. If you happen to be a first home buyer, fortunately most Australian state and territory governments have stamp duty waiver for property purchases up to a certain value.

Even with stamp duty waived, there are hard cost like governments mortgage transfer and registration fees as well as cost for your legal representation and relocation.

It’s also a good idea to budget in two to three thousand dollars more than what you think you will need into your savings goals, it’s best to be prepared for contingencies rather than have your settlement fall over.

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This article does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.