Buying your first home will, for many, be one of the largest purchases you will make in your lifetime. Given the significance of the financial outlay, it is certainly worth taking the time to do your research, and ensure that you can avoid some of the more common mistakes we see first home buyers make time and time again.
Our team at Loansuite wants to ensure that you get it right from the start. As such, this week we’re sharing the most common mistakes we see first home buyers make, and most importantly, how you can ensure that you avoid them.
- Ignoring the value of getting a pre-approval
Getting a pre-approval with an experienced mortgage broker can allow you to submit an offer on a property without the finance clause. This means that the vendor and the property agent are far more confident that you’re making a serious offer on the property, and you’re not simply wasting their time. In a ‘hot’ market, this can be incredibly valuable as it may be just the factor that tips your bid over the edge and lands you your dream property.
Importantly, a pre-approval can allow you to participate in auctions, where in most cases you can not submit a bid subject to finance. Having a pre-approval in place can give you the peace of mind that your finances have been fully assessed by the bank, and they’ve confirmed how much you can borrow. It’s important here to ensure that you have a fully assessed pre-approval and not just a computer-generated approval that really hasn’t undergone any due diligence with the credit assessor at the bank.
- Shopping in areas out of your budget
We should all be able to relate to this one. Think of a time when you’ve had a budget in mind to buy a particular item such as a new car, and you think to yourself, “I’m just going to have a quick look at the more expensive cars at that dealership”, thinking that it’s just to look. All of a sudden, you find that the cars within your price range are awful and you start finding arguments to support overspending.
By doing your homework up front, and crunching your numbers on repayments at both today’s interest rates, and what they’ll look like when rates are higher, which will undoubtedly happen over a 30-year mortgage. Avoid the temptation of looking in areas outside of your budget, unless it is genuinely for sensible research, as you may just find that you start finding ways to over-spend and you could land yourself in a position with an uncomfortable amount of debt.
- Skipping the important inspections
When you’re buying a home, given the financial significance of the transaction, it’s important to check as much as you can about the property that you’re buying. This includes getting your building and pest inspections carried out, completing a personal inspection of the property, inspecting any works carried out on the property and ensuring that they all have adequate approvals, ensuring that all safety regulations are adhered to with items such as pools and ensuring that your solicitor carries out the appropriate checks on boundaries and titles.
- Ignoring the additional costs of buying a property
Buying your first home is not just as simple as saving your deposit and then proceeding with the purchase. It’s important to ensure that you’ve factored in all of the additional costs of buying a property, including the following:
- Stamp Duty
- Conveyancing and legal costs
- Building and other pre-purchase inspections
- Lender application fees
- Mortgage registration fees
- Lender’s mortgage insurance if relevant.
Ensure that you’re aware of all of the costs involved in buying your property. Your mortgage broker and a solicitor will be able to outline an estimate of these costs for you before you’ve even found your property so that you can start exploring your options from a position of knowledge.
- Missing out on the First Home Buyer benefits and incentives
There are often many incentives for First Home Buyers, and in many cases, these are state incentives, so it’s important to do your homework here and explore what you might be eligible for. Recently, with the HomeBuilder incentives, and other first home buyer incentives for those purchasing new properties, in particular, many were able to benefit from a bonus of up to $55,000, which could just be the amount you need to get into your own property.
Don’t make the mistake of assuming that you’re not eligible. Your mortgage broker will be able to outline what options you might be eligible to apply for and provide you with the relevant sources of information for you.
- Letting the emotions dictate the purchasing decision
This can be a very common one amongst first home buyers, and even experienced property investors in some instances. We are only human after all, and if you’re looking to buy your own home, you’ll find that as you walk through a prospective home and start picturing where your furniture will go, that a lot of rational thought is thrown out the window.
To overcome this, we would recommend that you set a checklist before even looking at a property of what features are important to you. This might include the amenities and facilities that it’s close to, the types of neighbourhoods that you want to consider, the number of bedrooms and bathrooms, the garden and outdoor space, and anything else that is important. This will allow you to rank the properties, particularly if you’re considering looking at a few, and make an informed decision.
We hope that by outlining these common mistakes for you, that you can take sensible steps to avoid them for yourself. If you have any questions about buying your own home, or have found the property and want to ensure that you have the right financing in place for you, we’d love to help. Reach out to our team today for a complimentary discussion and explore how we can help to get you into your own home.
LoanSuite Pty Ltd is your lending partner for all of your home loan, investment property, business, and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.
Book an obligation-free, complimentary consultation here today.
LoanSuite Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.