Buying your first home is exciting. As one of the biggest purchases of your life, it’s important to avoid costly mistakes that may spoil the first home owner experience.
Here are some common mistakes you should avoid making:
1. Not doing adequate research
When looking at houses and their location, do your research. Sure, you need to love the house and it has to suit your needs but you also need to make sure the location is right for you. Look into the schooling options, public transport accessibility, even things like the local crime rate. These factors can determine whether the value of your house will increase over time and whether you would get a good return if you were to eventually sell. It’s also important that you know the value of the homes in your desired area. Seeing what similar homes in your preferred suburb have sold for can ensure you don’t overpay for a property.
2. Choosing the wrong mortgage
Before you start your search for the perfect home, talk to various banks to determine what your lending options are and how much money you can borrow. Determine whether a fixed or variable home loan is a better option for you. Choosing the wrong mortgage could see you paying unnecessary fees and interest over time.
3. Not allowing for additional purchase expenses
Often first home buyers don’t factor in the other expenses that come with a property purchase. Allowances should be made for stamp duty, rates, valuation costs, loan application fees and mortgage insurance.
4. Being influenced by the market
It’s easy to get caught up in what the experts are saying about the market, whether its the right time to buy or the right time to sell. Don’t be influenced by this. If you are ready to buy and have your finances in order, go for it. Waiting for the drop in prices that the experts predict may not come and if you wait you could end up paying a whole lot more for your first home.
5. Exceeding your budget
It’s easy to fall in love with a home and often buyers over-extend themselves to make what they feel is the perfect purchase. And while a little extra on the purchase price may not seem like a big deal, when you add on the interest over the life of the loan it may not be as affordable as you think.
6. Not protecting yourself when it comes to sales contracts
While most sales contracts are pretty standard, it’s important you ensure your interests are protected. Most contracts will include a cooling off period but you may need to include other clauses that will protect you, such as ‘subject to finance’ or ‘subject to building inspection’ clauses. Have a solicitor or conveyancer look over any contracts, they will often pick up on things that are of importance like heritage overlays or potential body corporate problems.
By researching and planning, you will hopefully avoid what can be potentially costly mistakes and be well on your way to buying your first home.