7 Mistakes to Avoid When Buying Your First Property
No matter the type of property you’re seeking to buy, often knowing how to buy can stop you making mistakes. Getting caught-up in the excitement of house hunting and finding the right home for you can often lead to errors. So, how can you avoid the seven most common mistakes made by first-time buyers?
1. Not getting home loan pre-approval
While you can contact a bank and ask if you qualify for a home loan, this may not be enough. Therefore, it’s important to get home loan pre-approval so you know exactly how much you can afford to borrow. This strategy will then allow you to focus on buying a home that fits your budget and will save you disappointment. After all, there’s nothing worse than falling in love with a property, and then discovering that you cannot afford it.
2. Not understanding home loan options
There are hundreds of loan packages available in today’s market, and lenders are extremely competitive. Consequently, by researching home loans and features and knowing what you want, you can get yourself an excellent deal.
3. Borrowing at your limit
Whilst a lender will pre-approve you to a certain amount and you can typically afford this. It’s also important to consider interest rate rises and how you will cope with these. Thus, only borrow what you feel comfortable with and leave yourself with extra to cover for rate rises. Also, set your buying budget at 3% lower than current interest rates to give yourself room to cover movements. Plus, save enough money to cover 6 to 12 months of your mortgage repayments. Then, you don’t have to worry about rate movements when they occur.
4. Relying heavily on real estate agents
Always be proactive when buying a home. These means doing your own research and looking at areas and homes yourself. While real estate agent advice is important to gain local knowledge, you also need to look at suburbs yourself. Visit local council and amenities to get an idea of what infrastructure and development is occurring in the area. This research will prove to be valuable when you go to make an offer.
5. Not having pre-inspections done
No matter the age of a home, it’s always important to have a building and pest inspection carried out. These checks, carried out by a qualified person, ensure that you’re buying a sound home. Not one that needs extensive work or repairs carried out, which can cost thousands.
6. Underestimating buying costs
When buying a home there are far more costs than just the purchase price. Other costs include:
Mortgage title transfer fees
Mortgage registration costs
Banks fees and charges
Emergency services levy
Before buying, estimate what all added costs will be. Then, make sure you save enough for these costs. This helps ensure you have enough funds come settlement. To learn more, refer to our Cost of Home Buying blog.
7. Emotional attachment
When looking to buy a home you can fall in love with it. But, rather than taking this approach think of buying a home as an investment. Consider your return and how much you will make on the property in the future. Such a philosophy will see you make a wise buying decision and buy an asset.
Overall, covering all bases before buying, enables you to buy the right home for you. You will also make a sound investment decision, and avoid making any mistakes.
Are you looking to buy your first home? Talk to Home Loan Depot today. Contact us here, call us in 1300 967 120 or email firstname.lastname@example.org. We can help assess and understand your situation better.