You’re sick of flatmates who leave filthy dishes in the sink, SO done with nosey landlords and can’t even deal with another expensive bond clean… it might be time to buy your first home.
But how exactly do you do that? How much can you afford? Where will get you the best investment? And what the heck is equity, anyway? Before you start freaking out, here are some of the big mistakes first-home buyers make, and how to avoid them. (Oh and by the way, equity is the difference between what your home is worth and how much you owe on it. You’re welcome.)
1 Not getting your finance sorted first
After exhaustive searching, you’ve finally found your dream home. Perfect! Now all you have to do is go to the bank and get finance approved, right? WRONG. By the time you can say “I’d like a loan, please”, someone with pre-approval has already swooped in and had their offer accepted. Get your finance approved from the bank BEFORE you start looking for your home. That way you’ll know what you have to work with and there’s no scrambling to the finish line.
2 Borrowing too much
This is the financial version of “eyes being bigger than your stomach” thing. Just because you CAN borrow that much money, doesn’t mean you should. Stretching your budget can mean you can’t afford to make necessary home improvements or may even stop you from enjoying your swanky new home. Worse still, if something unforseen happens, you have no room to move.
3 Not getting a building inspection
GET A BUILDING INSPECTION. Seriously. Not doing it is a huge mistake. Yes we know it’s expensive but it could be a drop in the ocean if you opt out and your house turns out to be full of termites, or on unstable foundations or full of wood rot.
4 Only looking at the house
It’s not just the house you’re buying, it’s the location, the neighbours, the parking, the proximity to transport, and any planned property developments nearby. Any little thing you think could influence your life in your new home needs to be sussed out. Because no one wants to discover they’re living next door to the resident party house at 3am on a Wednesday morning.
5 Not doing independent research
You wouldn’t rely on, say, a Mazda dealer to tell you what’s the best car to buy in the entire market… he’d only tell you about Mazdas. Similarly you shouldn’t rely on one real estate agent to give you the lay of the land. Be proactive and do some research yourself: what have similar houses sold for? What’s a good price for the area? That way, when a vendor’s agent (who will ALWAYS be acting on their client’s behalf, not yours) gives you a price, you’ll know instantly if it’s a realistic offer.
6 Not budgeting for hidden costs
Have you considered stamp duty? Home insurance? Moving costs? Council rates? Transfer fees? Well start! Otherwise you’re going to be forking out WAY more than you thought.
7 Getting emotional
We know it’s an emotional time, you’re all grown up now and buying a house! Well shut that down quick smart, buddy; emotions have no place in real estate. Firstly, you may have already picked out exactly where your couch will sit in relation to the coffee table but don’t let the agent know that, or they’ll have one over on you in negotiations. Secondly, falling in love with a property will only lead to heartache if it’s above your budget or won’t have a good return on investment. Keep your head in the game and stay business focussed and you’ll ensure you make decisions based on what’s smart, not what feels good.