We understand that starting a journey for the first time is challenging, especially when it involves financial planning, regulations, requirements, and paperwork you are not familiar with.
However, you don’t need to do this alone. As we always say, we are here to help and guide you, so let’s start with some very common mistakes that we see first time home buyers making but could have been easily avoided – so at least you know beforehand what not to do!
5 very common mistakes first home buyers make and how to avoid them
1 – Searching for properties before getting the pre-approval
You might think the first step to take when buying a home in Australia is attending auctions and looking for the properties online as soon as you can. This is indeed an essential part of the process; however, making sure you will be able to afford that house is even more important.
If you consider applying for a mortgage, the very first thing to look for is having a pre-approval of your home loan. The pre-approval is a written agreement from the lender testifying that you can borrow a certain amount of money to purchase a property. This will help you understand your budget and focus on houses you can afford.
2 – Going beyond your budget
Speaking of which, sticking to your budget is crucial to make this process work well. It might sound too obvious, but we often see this mistake among first-time home buyers. They get excited by amazing properties and let their emotions influence their decisions, even when those houses don’t fit in their pockets.
Buying a house that costs more than you can afford is a dangerous decision that might also impact your lifestyle down the track. So organize your financial life, understand your income and expenditures and how much you can really compromise with repayments.
3 – Not considering the extra costs of buying a home
Ok, you have found the perfect home that fits into your budget, you’ve got the pre-approval, and you have saved exactly the total amount needed for the deposit. You are definitely on the right path, although it is not done yet!
Another important tip for first time home buyers is not to forget about all the other costs involved in buying a house, such as stamp duty, registration of title, building and pest inspections, legal and conveyancing fees, insurance, council rates, strata fees, and moving costs.
They might seem secondary, but they will compromise a significant amount out of the total cost.
4 – Neglecting home inspections
Skipping inspections, such as pest and building inspections, can make you spend a lot of money in the long run. Imagine if you find the perfect house, sign the contract, move in with your family, and some months later, you come across an unexpected termite infestation that may affect the whole structure of the house, for example.
This will be not only very costly to repair, but also will give you a big headache. So the tip here is to plan ahead and consider pre-purchase inspections on your budget.
5 – Relying on Online Calculators (not looking for professionals)
We understand that first time home buyers have to deal with too much new information simultaneously, and this can be overwhelming. And of course, the internet is a very helpful tool to start that research, check home costs, estimate your borrowing capacity, and understand how much you would have to repay per month.
But be careful! Online calculators are not always accurate, and relying on them to plan your finances can give you an unrealistic view of your possibilities. Our advice is to talk to a mortgage broker who will go through all your information in detail to present solutions tailored to your specific needs.
Talk to us and we will be more than happy to help you plan and organize all steps of this journey towards your first home.
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