7 Common Mistakes Made By First-Home Buyers
Purchasing your first home is a huge milestone. It is one of the ultimate forms of independence – both in a physical and financial sense. But it is also something that carries a lot of weight and responsibility and should be treated as such. There are a lot of things that can go wrong when making a purchase of such value and it’s important to know what you’re getting into, as well as the ins and outs of the industry. Our Williams Landing real estate agents have prepared this blog to help educate first home buyers on some of the common mistakes that others have made and how to avoid them.
1. Getting hung up on looking for the perfect home
You will come across a lot of homes when you start looking. Some of these you may even fall in love with and think you’ll live in forever. However, you need to keep in mind that situations change. Factors like your relationship status and children could easily alter what sort of home will suit you in the future. What works for you now, may not work for you forever – and that’s okay.
2. Making impulsive decisions
The last thing you want to do when commencing such a large investment is making a decision off the cuff or because you’re feeling pressured by someone to do so. Although you might fall in love with a house as soon as you walk in, for example, don’t let this cloud your judgement on its potential faults. Always do your research with the help of our Williams Landing real estate agents, because what may not be evident now might cost you thousands in the years to come.
At the open inspection, try to observe the house objectively and then go home and think about it rationally. Perform the correct calculations. Keep looking. There are plenty of houses out there and you should not limit yourself to one just because you’re starstruck. This tip also applies to outside influences pressuring you to make a decision. There is no deadline for this, and you can take as much time as your bank pre-approval allows. If one house goes off the market, then there’ll be another one to take its place.
3. Thinking you actually need a 20% deposit
Whilst it will help in the long run, putting down a 20% deposit on your house is not compulsory. Putting down 20% will help you in the long run but the minimum deposit for a house is actually 5% thanks to the Coalition’s new first home buyers scheme – provided you’re eligible.
The only benefit that comes with depositing more is the reduced mortgage and subsequent interest you’ll have to pay in the future. Alternatively, if you’re convinced the market is presenting you with a fantastic opportunity and you don’t quite have 20% – you should apply for a pre-approval loan ASAP.
4. Getting the wrong home loan
Whilst you may initially be tempted by low-interest rates, it’s important to know that these rates can change. This can leave you in a stressful situation if you can’t afford to meet your monthly repayments later down the track. Make sure you choose a loan that you can afford and the one that you need instead of getting pulled in by low-interest rates. As a maximum, try to aim for five or six times what your annual income is.
5. Not considering your other expenses
Generally, when you rent a property, the utilities will be included in your rent. But when you purchase a property, you have to pay for all of the utilities yourself. This is something that first home buyers can forget when doing their calculations. This is an important factor that you should try to remember and consider when taking on a loan, because at the end of the day you will also have additional non-discretionary expenses on top of your utilities that need to be paid for, too.
6. Skipping the inspection
This one ties into our second point about being impulsive. There’s no rush, which means there’s no excuse for skipping an inspection. You should look at what you’re buying before you actually buy it. If you have a house on your shortlist, visit it a few more times – be thorough.
7. Confusing your pre-approval loan with an actual approval
Applying for a pre-approval if you’re seriously considering buying a home is a great way to get your foot in the door but it is not a guaranteed loan. There are more steps that must be taken to actually have your loan approved and it is not an uncommon thing to have a loan declined even if you received a pre-approval.
Are you looking for real estate in Williams Landing?
If you would like to get in contact with one of our Williams landing real estate agents, then please give us a call on 03 8372 2122 or fill out the form on our website.