I remember back to when all I wanted was to own my first home. In my naivety I thought that all you had to do was find a house you liked, plug the figures into a mortgage repayment calculator and see if you could afford it. If you could, you bought the house, and lived happily ever after!
Unfortunately for me that wasn’t the case, so reality hit pretty quickly. Lets just say my first home purchase was not what you’d say dreams were made of!
The fortunate part of the story is that the whole experienced opened my eyes for future purchases and probably played an integral part of my becoming a buyers agent, with a soft spot for First Home Buyers.
Here’s some common mistakes to avoid, which may help you from repeating the same mistake I made!
Becoming too emotional
Falling in love with a property is perfectly normal, but it can hinder your thought process. Making decisions based on your emotions could see you paying more for your dream home, or possibly cause you to overlook important issues.
When inspecting a property have a list of things that are most important to you, i.e schools or public transport. But also include items to inspect like lighting, mould, sagging ceilings and uneven door frames. Additionally, a pest and building report should be done before signing anything.
If the buying process feels a little overwhelming, this may be the perfect time to consider hiring a buyer’s agent.
Spending more than your budget
A home is a big investment and you want to make sure you can afford it in the long run. It’s easy to get swept up in the moment and thinking you can cut back on other parts of your budget to afford the house you’ve fallen in love with.
When crunching the numbers to determine your budget, make sure you’ve made allowances for extra costs such as stamp duty (varies from state to state), insurance and legal fees.
Don’t forget to factor, possible interest rate rises or changes to your circumstances in the future.
Even if you did have the extra money to invest, it’s always good to try to add extra money into your mortgage, rather than borrowing your maximum.
Just to give you an example if you had a $400,000 loan, your repayments were $400 per week, but you could put an extra $50 into your mortgage etc week on top of your loan repayment, you could cut over 5 years off your mortgage, and save an additional $70,000 in interested compared to if your repayments were $450 a week because you ad to borrow $440k to begin with.
Not doing your research
Don’t believe everything you’re told. The real estate agent will act in the best interests of the seller, it’s their job and they sign a contract t o say they will do just that. Even if you trust what the agent – or your friends and family – are telling you, it pays to do your own research and form your own conclusions.
Talk to other experts, get to know the neighbourhood demographic and familiarise yourself with how much similar properties in the same area have sold for.
Look into any planned developments for the area because that could impact the capital growth on the property or ability to rent/sell down the track.
It also pays to check the crime rate of the area. This not only gives you peace of mind, it could affect the cost of your insurances.
Not being prepared
Buying a home can sometimes be a race between Byers to the finish line.
This means you really need to have your finances sorted, pest and building reports completed and your contract looked over by a solicitor before signing on the dotted line.
Not getting professional help
There are so many variables when buying a house, so this is by no means a comprehensive list of what you should be checking or researching. It may seem like a luxury to hire a buyers agent, especially when you’ve spent so long saving every last dollar for a deposit, but that is exactly the reason to hire one. They save you money, save you time, save you stress, but most importantly, save you any costly mistakes!