Common mistakes to avoid when buying your first home
Your first time looking at homes for sale with an intent to purchase can certainly be a learning experience.
There is a significant amount of annual property sales in our country. According to the Australian Bureau of Statistics (ABS), first home buyers make up around 16 per cent of all owner occupier housing commitments. This accounts for nearly 8,500 Australians buying their first home every month.
Given that even the most experienced investors are prone to the odd blunder, it would make sense to add as much weight to your decision as possible. It’s often said that you learn from your mistakes, but given the size of home loans usually involved in property, it’s probably a better idea not to make any in the first place!
Here are a few common mistakes made by first home buyers and how you can avoid them.
Underestimating the full cost
The Australian Securities and Investments Commission recommends saving a deposit of at least 20 per cent before you fall in love with a property for sale. This means if you were looking at borrowing $400,000 from your mortgage broker, you would ideally have $80,000 in your savings account.
You shouldn’t, however, use your entire home loan solely on the purchase of the property as there are additional costs that aren’t immediately obvious. These can include professional inspections, Lenders Mortgage Insurance and stamp duty. It’s important you factor these into your budget.
Not undertaking a professional inspection
A building and termite inspection is an investment that is well worth the cost. In addition to bringing any potential issues to light, it can also provide you with some bargaining power, enabling you to negotiate on the purchase price.
According to the Australian Termite Research Centre, the estimated cost to Australian homes from termite damage alone is in excess of $1billion every year. Therefore, it can pay (literally) to have any homes for sale that you’re interested in checked up.
Not considering all aspects of the property
After trudging through various listings, you think you’ve found the right home. It’s where you want to live, it’s big enough, it looks to be in your price range including other expenses and the inspection went relatively well.
However, have you considered questions like:
- What’s the neighbourhood like?
- What are the people like?
- Are there any scheduled developments to the area?
- How long will it take me to get to work?
The last thing you want is to move your family into a new home, only to find out it’s a student neighbourhood with parties every night and rush-hour traffic every morning!
Don’t be intimidated, though, as figures from the ABS show that year on year around 90 per cent of first home buyers are satisfied with their purchase.