Buying your first home can be a very exciting moment. Knowing that you can finally have a place that you can call your own. But sometimes, once you start looking the entire process can become extremely daunting! These are some common mistakes that we see occurring regularly.
Number One: NOT DOING THE RESEARCH
I personally am an over preparer! It doesn’t matter what I do, that is who I am. But, when it comes to purchasing a property it is vital to know why you’re purchasing and make sure you research the market to know what other properties have sold for. It is always going to be easier to just go with the bank you have been with since you were 4 to secure your finances but it always helps to shop around. Try and source the greatest rate and if this becomes overwhelming consider using a mortgage broker. The other thing to consider is to not just think solely about this first purchase but to try and think about the future. Is this an investment or your forever home? This will affect your end decision as to how much mortgage you should commit to and what you should buy.
Number Two: MAKING AN IMPULSE DECISION
It is easy to be intimidated when looking at property. It is also easy to get carried away. I would suggest making a checklist sorted in order of importance to really help you with your search.
If you were to fall in love with a home that does not meet the exact needs you have established and it is pushing your budget always remember not to compromise on your most important items. They may seem small when you walk into a staged home that looks potentially perfect but when you look back at your list, check, and if it doesn’t meet 50% of the required needs then it is just not viable. This is where a buyer’s agent can really attend to your needs. Rather than visiting every home within your bracket if you pass on your requirements to the buyer’s agent they will do the hard work for you and narrow it down to 4-5 listings that are suitable and meet at least the minimum requirements.
Number Three: DO NOT BORROW BEYOND YOUR BUDGET
This again is where so many first home buyers and home buyers in general can fall short. Just because you are able to borrow $500,000 does that mean you have to spend $500,000? No! Look around. Be smart. Less borrowed means less interest, and the fewer payments and interest means you can get more of a head start on your loan!
On the other spectrum, some people are able to borrow $500,000 then start looking at properties listed at $500,000-$550,000. You put the offer in for $500,000 however you are negotiated upwards. Note: this is not inclusive of all of your other ongoing costs such as inspections (pest, plumbing, electrical and building). Dependent on your circumstances, stamp duty, buyer’s agent fees, settlement agent fees, transfer of title fees. The list is surprisingly long. It is a surprisingly easy trap to fall into so just be wary of your budget. Keep below and even if you miss out on a property remember there are always more properties. This leads us to number 4.
Number Four: ADDITIONAL COSTS
Dependent on your personal circumstances there are many different incentives for first home buyers which is great, however, you may not be able to apply for this depending on your circumstances. Keep in mind there are so many additional fees that most people fail to mention. It is easy to be jealous of your friends who have just purchased their first home, posting an Instagram photo in front of the sales sign, however, in that photo they never recognise, give credit to or talk about the stresses and costs behind a mortgage or the fees involved.
It is extremely important that when you purchase a property that you spend some time to calculate and budget, not just the mortgage and transfer costs but also the building costs. It is wise to have a back-up for emergencies such as a surprise burst pipe or ongoing maintenance such as dripping taps, light bulbs, leaking pipes, gutter cleaning, lawn mowing or roof repairs. However, not only do you have maintenance costs you have ongoing costs such as Council Rates, Strata Levies, Water Service Charges, Estate Fees and a number of fees that you need to cover as part of the mortgage fees. Home ownership can be extremely rewarding however keep in mind the costs associated. If you have previously rented, you would have known that you had to cover both rent and your utilities and that was all. Now you will need to factor in rates and service fees with these utilities.
Number Five: NOT THOROUGHLY READING THE CONTRACT
If I had a dollar for every time someone has said to me “we purchased without reading the fine print” I would be retired. This is no joke and is not just in relation to sales contracts but also in relation to finance for a car or phone contracts. It is something interesting that we feel that a contract is so hard to read. I am definitely not saying reading a contract is the MOST fun thing to do but if I am paying money to an entity ESPECIALLY for something as large as a home then I would read it ten times over. If you cannot fathom sitting and reading a contract then you can always ask for help. Ask a solicitor to read it on your behalf. Too often do I hear “well there are fair trading rules for a reason. If I am unhappy I’ll deal with it after.” This I find more in relation to phone or smaller finance contracts however it is still a bad decision not to know what you are signing.
Take your time with the contract. Take it away and read it at home. If the salesperson is pushing saying if you do not sign today then the offer is gone, then there may be something in the contract that is concerning. Anytime I have a buyer signing an offer and acceptance I will personally go through every point with them and elaborate on parts needed. I also encourage them to ask questions and fully understand the general conditions laid out. I also think that this builds trust with my buyers which for me is super important and builds long-lasting relationships. I also think that if a salesperson cannot take you through the contract then they may also not understand the full terms which they are putting you under which is a bad sign.
These tips are only guides but it is always extremely useful to talk to others about this and not to hide the fact you are looking to buy. Reach out to your friends and family and talk about their experiences. Speak to a local agent, such as Umbrella, we are always happy to help you and guide you in your journey to buying your first home!
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About the Author
Celestine has been in the Real Estate Industry since 2002. She has competed in some of the most competitive markets in Australia. Combine her strong negotiation skills and keen customer service to achieve the best results for her clients.