Last Updated on March 25, 2022 by Kravelv
Buying your first property is a massive leap of faith. No matter how much time you spend researching and getting advice, there’s always going to be that seed of doubt that grows. You may be asking yourself questions like, “have I made the right decision?” and “am I financially prepared to pay off a home loan?” The truth is there may always be an element of doubt because buying a house is such a huge milestone in your life.
By avoiding some of the most common mistakes that first home buyers make, you can help safeguard yourself from disappointment. You can start to eliminate some of the financial risks associated with purchasing a property. If you want to know the most common mistakes you should be avoiding then read on. Avoid these mistakes to help make your first property purchase a success.
1. Choosing the wrong type of home loan
For many people, home loans can be confusing. It’s hard for first-time buyers to understand all the different types of loans out there as well as which will work best with their financial situation. There are fixed rates that stay at one level over time versus variable ones where the interest rate changes based on market conditions such as inflation and other economic factors. Principal payments (the amount you pay back each month) is also an important factor when deciding whether it would benefit someone financially if they have more money than debt or vice versa because then mortgage repayments may go towards paying off debts instead of just reducing them from your assets total on paper.
Next time you buy a house, be sure to get the right home loan. The variety of loans on offer can seem confusing but it’s important not to go in blind and take out an unsuitable mortgage that will leave you struggling for years down the line. Don’t be afraid to seek out the right advice from a financial professional like a mortgage broker. Take the time to ask all the questions you need until you fully understand what you’re signing up for.
2. Letting your emotions take over
If you are falling in love with a home, don’t let the little things cloud your judgement. Many people fall for houses that they may not be able to afford because of these small details like hardwood floors or a walk in robe. It’s important to think about the real value of these features and to consider that just because a house doesn’t have them now, doesn’t mean you can’t add them to the design later on.
There are many factors you should consider when buying a new home. You should find what really matters in your life, such as the number of bedrooms you want and if it is close enough to places like schools or shopping centres for example. Make sure that the property has potential opportunities with its location too. Are there plans for major developments nearby?
3. Borrowing more than you can afford
A lender shouldn’t be the deciding factor in what you can afford or not. They are likely to just say yes because that’s a key part of their job: lending money and getting people into as much debt as possible. Take advice from professionals with your best interests in mind like mortgage brokers or buyers agents Melbourne. They can help you understand just how much you should be borrowing for your earning capacity and the best types of houses you can get within your budget.
A great way to avoid wasting time is by getting your finances in order before you start looking at properties. Without a firm understanding of what your financial situation looks like, it’s easy to fall in love with houses and then be disappointed when the reality sets in that they’re out of reach for now or for the near future. Having everything lined up ahead of time will make it much easier to find a place where both your heart AND wallet are happy!
4. Not doing enough of your own research
If you don’t research the property market, it can be hard to know if your house hunting strategy is working. Make a list of suburbs and spend some time in each one within two or three months for a better idea on how prices move through different locations. It’s also wise to get familiar with the neighbourhood because there are many more factors than just where your new home sits. You’re buying into that house’s location and lifestyle as well!
Find out about local schools, crime rates, transport links and any upcoming zoning issues before making this important decision for yourself, your partner or family. All of these suburb features will have a drastic effect on your lifestyle. They can affect how you get to work and even your work-life balance.
5. Underestimating additional costs
Although the initial deposit on your house is a factor, there are many other costs that you will need to consider. For example, stamp duty and bank fees contribute to upfront expenses. Additionally, there are building and pest inspections to think about as a first home buyer. There’s also the cost of any repairs or upgrades to the house you may want to consider. Just like any new homeowner, inspections and repairs can be costly for new homeowners. At the end of the day, you want your home to be safe from any major issues before moving in.
Those looking into purchasing property or who have already purchased theirs know that rates (or mortgage payments), insurance policy premiums and maintenance change quite a bit over the course of property ownership – so don’t forget about budgeting appropriately. Keep everything within your means and set realistic goals for yourself.