Buying a house can be a daunting, complex and often frustrating experience – and that’s for people who’ve done it before! A first home buyer can often feel completely overwhelmed when faced with their first property purchase.
If you’re about to buy your first home, you may feel like you’re on the brink of taking a great leap into the unknown. The idea of lenders, real estate agents, solicitors and vendors all with mountains of forms, requirements and jargon may have you wondering whether it’s worth all the effort. And on top of all that, you still have to find the right house!
Relax – it’s not that bad.
Save time and money by avoiding these common first home buyer mistakes
1. Underestimating the costs of purchasing property
Some first home buyers make the mistake of thinking that if they’ve got a $50,000 deposit and a $500,000 home loan approval, they will be able to afford a $550,000 property. The truth is that there are many other costs involved, other than the price of the home. Inspection reports, Lenders Mortgage Insurance (LMI), solicitors’ costs, and stamp duty are just a few of the additional costs involved in purchasing your first a home.
2. Over-extending
Buying your first home should be a happy experience, not one that leaves you racked with doubts and resentment. Far too many first home buyers find themselves in difficult situations because they didn’t stick to their budget, or they didn’t create a budget that was realistic for their needs. The best way to avoid overextending is to have a firm grasp on your current income and expenses. If you know exactly where all your money goes each month, before you buy, you will be much better able to plan an affordable repayment strategy. When it comes time to make an offer, never go above your budgeted purchase price. You never know what might happen in the future that will put strain on your finances.
3. Not taking advantage of first home owner concessions
The First Home Owner Grant is a government initiative to assist people in buying their first home in Australia and can save you thousands in duties and fees. Visit the First Home Owner Grant website for details on each state’s grants.
4. Not considering all aspects of a property
It can be hard not to let emotions get involved when inspecting a property. People immediately start thinking about how they’re going to remodel the bathroom or how they might arrange their furniture. The tendency to get too far ahead and caught up with the aesthetics of a property often distracts people from considering other essential points. Think beyond the home. What is the local council like and how do their services measure up? How has the suburb been trending in the past few years? How is the home positioned and what are the neighbours like? Are there many owner-occupiers around you? Is there adequate public transport? Are there infrastructure or building development plans near the property?
5. Failing to get a property inspection
A building inspection is a worthwhile investment for a number of reasons. Aside from their ability to bring potential problems to light, building and pest inspections can also be used to negotiate on the purchase price. We’ve all heard horror stories of buyers discovering structural faults, water or pest damage after spending their whole budget on purchasing the home. If you can get a third party to identify any issues before you purchase, you will have much more bargaining power with the seller.
Good luck with the house hunting and look forward to the memories that you will create in your new home. If you would like to talk to one of our mortgage brokers contact us today. One of our friendly advisers would be delighted to speak with you about your property investments.
The information provided in this article is general advice only. It is prepared without taking into account your objectives, financial situation or needs. Before acting on the advice in this article, please consider the appropriateness of the advice, whether the advice is appropriate to you, your objectives, financial situation and/or needs, before following this advice.