10 Common Mistakes First Home Buyers Make

Are you looking at buying your first home now or in the future?

Please read carefully all the steps so that you can make a wise decision.

Mistakes First Home Buyers Make

1. Buying emotionally – Your first home is not likely to be your last home, so it’s better not to get too emotionally invested in the process. Instead, think of it as an investment, and a stepping-stone to your next property. Keep in mind that you are borrowing around 80% from the bank, so it is a big liability for you. With the proper planning, you can turn your liability into an asset.
2. Not factoring in all of the actual costs – Everyone looks at the price of the property first, but it’s important not to let all of the other costs, like stamp duty, conveyancing, moving costs, rates and taxes and insurance and maintenance, body corporate fees, and mortgage fees get left out of the equation.
3. Not understanding the building price or process– Most builders out there will show you the base price to attract your business. In most cases, they do not add the site cost, government levies, driveway, landscaping, fencing and other important items like blinds, fry screen, etc. that you need to have a complete house. For example, if the advertisement says a single-story house starts from $180,000 means it is not the full price, you need to add another $50,000+ for all other charges and items and then your whole building price will be close to $260,000-280,000. If you do not understand the whole process, you might be in big trouble settling in the property.
4. Overextending financially – A mortgage broker can help you navigate loans and work out a budget, so you do not end up taking on more than you can really afford.
5. Not doing your proper due diligence – Do not forget the seemingly little things like building and pest inspections. These can help you avoid potentially big problems down the road.
6. Not understanding the contract, you are signing – Once you’ve signed a contract, you’re obligated to fulfill the terms, so it’s important to know what you’re getting into. Your legal representative can help make sure that you are fully informed before signing on the dotted line.
7. Not getting finance pre-approval – When you get your finances organized ahead of time and get a loan pre-approval, you’ll know exactly how much you have to spend and be at less risk of overextending yourself.
8. Trying to do it on your own or not having a mentor – Buyer’s agents, investment advisors, mortgage brokers, and solicitors are all examples of professionals whose expertise can help make sure that your buying process goes smoothly and you get what you want and understand what you’re getting. Do not try to go it alone.
9. Not planning ahead-Your first property will determine where you going to be in the next 5-10 years. What if the area you are buying is not going up in value or what would you do if your interest rate goes up? What impact would it put on your life or in your finance at a later stage? According to our research, about 11% of first home buyers will sell their house in less than 10 years or will go through massive financial stress due to not having a proper plan. Therefore, you should engage a mentor who helps you to understand the whole financial process and future outcomes. Just do not listen to your friends and family, their intentions are obviously good, but they are not the experts.
10. Not knowing when to buy-Most home buyers are confused about when to buy and they do not understand that when they have a job and banks giving them money is the best time to buy. Property prices between $400,000-$550,000 will never go down in value due to any circumstances. Currently, Melbourne’s median price is $830,000. Any property above that price range may have been affected but not a house in an ideal location that you bought for $540,000. According to CoreLogic data between 1995-2017 Melbourne property price went up by 335%.