Top 10 Tips for First Home Buyers
Top 10 Mistakes First Home Buyers Make When Buying A Home 1. Not setting out a clear budget
It is essential that you borrow within your means, and consider costs other than just the mortgage repayments. Have you budgeted for legal fees or loan establishment costs? What is going to cost to get the property valued? Underestimating the costs involved is a common error among first homebuyers. Ensure that you have some savings for these costs, and a buffer in your budget in case there is an unexpected extra cost. A good mortgage broker will be able to explain all these costs as they apply to your unique circumstances and calculate exactly how much you will need to own your first home.2. Get the right property
Once you find a home you like, get in quick! Whilst it is important not to rush into buying a property you are unsure of, if you like somewhere, then get the ball rolling now. Organise finance, property reports and consider making an offer. If you hesitate, then someone else might just beat you to the dream piece of real estate.
3. Not researching property prices
The Australian Bureau of Statistics consistently publishes data which you can access on their website. Check the Real Estate Institute for your state to find out more about prices and values. It is important that you know what the current prices are in your area, what you are likely to be paying and whether prices are going up or down. Buying a home is an investment and before parting with your hard earned money you should research the property and mortgage market.
4. Missing property inspections
A building and pest inspection is crucial to buying property. Before you commit to the biggest purchase of your life, be sure to have a professional check out the property. A combined pest and building inspection will give a written account of the state of the property, highlighting any problems such as significant building defects or issues such as rising damp or movement in the walls (cracking), and the cost to fix them. The combined report will usually cost around $500 but could end up saving you several times that amount. You may think that the house is clear of termites but an inspection can check this out once and for all. You will need to find an expert and make sure you read the report they give.
5. Going beyond your means and budget
Don’t let emotions rule your head! As a first home buyer (and this rule applies to anyone buying property), you should never go above your budget and financial means. So no matter how much you like a property, don’t go there if it is too much for your budget. If you do, it may affect you and your family's short-term and longer-term financial situation. It's always better to play it a bit safer and think about events that could happen in the future, for example job loss or interest rate rises. There are several ways to calculate repayments (a mortgage calculator is the obvious strategy).
6. No neighbourhood watch
Check out the area that you are planning to buy in. If public transport is important to you, check the availability. What about schools? Pubs and cafes? All these things can affect the standard of living in a particular area. Are prices in that area going up or down? It’s a good idea to visit the area during the day and at night as it can be a very different scene at different times. Make sure your home purchase is a good one.
7. Not getting pre approval
First-time home buyers sometimes mistake pre-approval by a mortgage lender with pre-qualification. Pre-qualification is the important first step. It will give you a great understanding of what you can realistically afford to buy. Pre-approval means that your have a written commitment from the mortgage lender for a maximum mortgage at a stated interest rate. Melbourne mortgages can be pre approved within days, using our system.
8. Not considering lifestyle choices
If you really want a quiet life and enjoy the country then you should consider buy a property far out of town. If you enjoy the café lifestyle and a busy nightlife, then you need to look close to the city. Sometimes first homebuyers can get so carried away with this exciting moment and find a bargain, then rush into a decision they later regret. It is a balance between what you can afford, where you want to live, where you work and the lifestyle you lead. Take time now to consider your options and think carefully about where you want to love.
9. Council approvals
If you find a home you like, check that any work that has been done meets council approvals. Any work that has been carried out must be legal and compliant. Ring the manager of the building section of the local council to run checks. Think how upsetting it would be to buy a property only to be told six months later that you have to pull down the extension, or worse, the whole property because of non-compliant work. Most lenders will refuse to approve finance until a renovated property has been checked. If you are taking advantage of the First Home Builders Grant and building your own home, then ensure all the work meets council approval.
10. Not being familiar with the sales process
Before you start your search, be aware of the practicalities of buying a home. For example, read up on how auctions work, the best way to go about making an offer, what to look for when buying property, and real estate agent tricks and traps. Speak to friends and family about their experiences. Finding a great Melbourne mortgage is much easier with a local mortgage broker.
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