Buying a house is likely to be the biggest transaction you’ll ever make. It’s an exciting journey, but it’s also full of complexities. So there are a lot of things that you need to consider and avoid before diving in. If you’re thinking about buying your first home or just starting out on your property investment journey, there are some things that you need to know before making the purchase so that you don’t find yourself making any costly mistakes. Here are the 8 most common mistakes first home buyers make:
1. Most first-time homebuyers dive straight into looking for property without proper research and preparation.
Preparation starts with understanding your financial circumstances and future objectives. Before you start the house hunt, you’ll need to analyze your existing assets, calculate your debt and get pre-approved for a home loan.
2. Looking for a house before getting pre-approval from a lender.
Many first-home buyers make the mistake of putting down a deposit or, worse, signing a contract of sale before getting pre-approved. They put themselves at risk of losing their deposit if they fail to get a loan approved before settlement. A pre-approval is usually valid for at least ninety days, so that’s more than enough time to decide on the property you want to buy.
3. First home buyers choose the wrong home loan.
It’s important to pick your finance package carefully and make sure it aligns with your financial needs and goals. We suggest avoiding sticking to just one bank. Instead, get in touch with a mortgage broker who has access to various lenders and finance products.
4. Home buyers underestimate the additional costs that come with buying property.
It’s not just the deposit you have to be worried about. You have to budget for the loan fees, lenders mortgage insurance, stamp duty, strata fees, valuation fees and pest inspection costs. So, while you’re budgeting for a deposit, remember to add an extra five to seven per cent of the purchase price.
5. Not organizing a professional building inspection.
It’s important to engage a competent and independent professional to check your potential new home for any major faults. But look, these inspectors are trained to find faults, so don’t let minor faults deter you from buying the property, but keep an eye out for major faults that could end up costing you in the long run.
6. Missing out on first home buyer grants.
Governments offer different grants, schemes, discounts and incentives to help first home buyers break into the property market. They’re there for a reason, so make sure to take advantage of the benefit. Make sure to research which grants you may be entitled to. After all, you are buying your first home.
7. Letting the emotion dictate your purchasing decision.
Deciding where you’re going to live is very much an emotional experience. When you’re looking at a property, it’s very easy to get caught up in the emotion of it all. Instead, let logic take charge. Here’s where planning and preparation comes into play. Make sure you’re clear about what you want, what you need and what your budget is. This way, you won’t overspend just because your heart tells you that a certain property is your dream home. Remember, spending more than you can sensibly afford leaves you exposed to potential financial shocks, including rises in interest rates.
8. Trying to do it all by yourself.
There’s a lot to plan and consider when buying your first home, which means there’s a chance you’ll miss an important step in the process. Professionals like mortgage brokers, buyers agents and quantity surveyors like us are there for a reason: to help you navigate the home buying process for your situation without much hassle.
For more information, please don’t hesitate to contact us at 0426667696 or send us an email for a free consultation at contact@ozbroker.com.au to find out which loan structure best suits your needs and requirements.