6 mistakes to avoid when buying your first home
Buying a home is a significant moment in life. Yes, it is thrilling, but it can be easy to get caught up in the rush of it all. We’ve listed some of the common mistakes first home buyers make.
1. Not giving it enough time
It takes time and effort when looking to buy your first home. Preparation begins by assessing your financial circumstances and you may also need to think about your family’s requirements (schooling, sports clubs, and access to public transport). Then, take into account personal factors such as future career goals and aspirations – would your new home be good enough to accommodate individual needs and dreams?
If you are a couple, you may wish to consider a growing family and its unique needs. Giving your own unique circumstances sufficient thought and time helps you steer clear of some of the common mistakes in buying your first home.
2. Check out the neighbourhood
When you buy your home you’re not just buying four walls - you’re also essentially signing up to the surrounding area.
Every locality has its own unique set of characteristics and trends. There are specific qualities of schools, demographic factors, crime levels, access to public transport, traffic congestion, and expansion plans.
Houses bought in a hurry, looking mostly at the investment value, tend to ignore these underlying factors which could affect your home’s future value. It is as important to research the neighbourhood as much as you investigate your property.
3. Plan your finances
One common mistake is when new homeowners do not go through their finances in sufficient detail. Getting your maths right could set you on the path to having your loan pre-approved.
Think of your personal assets and debts like the balance sheet of a company – count your grantassets and evaluate your liabilities. This is what lenders do when you approach them for home loans.
4. Mistakes in First Home Owner Grant (FHOG) applications
Eligible new homeowners could get support from state and territory government grants - these vary in amounts based on your state of residence. These grants are usually subject to terms and conditions and caps in terms of purchase prices as well as the amount of grant available for new homeowners.
These conditions can leave room for mistakes. Things like not making the property the principal place of residence of the applicant or advising when circumstances change, not disclosing the name of your domestic partner or spouse, failure to disclose receipt of a prior grant by the domestic partner or spouse, or purchasing the property in a child’s name while the payments are made by parents.
It is important to seek the right advice and be sure to read through and be clear about the terms and conditions associated with First Home Owner Grant (FHOG) applications to avoid these common mistakes when buying your first home.
5. Misreading the market
When you buy a home, looking into various markets is essential. However, reading too much into market fluctuations can be the source of your downfall.
Sometimes, information available in the media could give out conflicting signals and may not necessarily reflect market realities. You should also be aware of short-term fluctuations that may be different from long-term trends.
One way to see through these fluctuations and conflicting symbols is to be an avid watcher of the housing market. If you want to be sure that you aren’t misreading the market, it’s a good idea to have a broker working for you.
6. Overshooting your budget
Budgeting and planning finances is nothing short of an art form. However, budgets invariably tend to be overshot, not because of your inability to foresee the future, but because you could easily fall in love with your own home.
As you get involved with your own project of looking for a home that you hold close to heart, you could be tempted for an upgrade to your dream home (and a stretch of the budget).
Going beyond your borrowing limits means exposing yourself to financial shocks and insecurity. So kick in your willpower, and stick to that budget.