It’s one of the most stressful rites of passage in an adult’s life, and any risks you take when buying a house can cause significant repercussions down the track. We have put together a list of seven common mistakes that homebuyers make in their eagerness to get on the property ladder.
Fail to prepare, prepare to fail. Savvy home buyers will do a lot of number crunching before they indulge in house hunting of any form. It is vital to understand assets and debts, as well as get pre-approval for finance before you start your search.
It is also prudent to get to know the neighbourhoods in question when house hunting – you’re not just buying a new property, you’re investing in a location. Learn as much as you can about crime statistics, transport links and school quality before you come to a decision. Physically visiting or driving around the location in question is helpful to get a feel for an area.
GETTING CARRIED AWAY WITH EMOTIONS
Desperation or desire to capitalise on perceived ‘booms’ is where many buyers come unstuck. For many, the emotional toll of searching for the perfect home coupled with offer rejections and competition leads to buyers lowering their standards unnecessarily. If you are finding yourself fatigued by the property market, take a break to remind yourself of your priorities before recommencing your search.
CHOOSING THE WRONG MORTGAGE BROKER/BORROWING TOO MUCH
Put yourself at a competitive advantage against other buyers by getting finance pre-approval before house hunting. You need to make an appointment with a bank to fully understand your borrowing potential, rather than relying on loan calculators that don’t always match what a bank is actually willing to lend you.
Home loans are easier to get now than they have been in the past, but that doesn’t mean you should rush into a decision – recruit an independent finance broker to advise you on your best and safest tactic going forward.
BREAKING THE BUDGET
The first thing you need to do once you’ve made the decision to purchase a house is to set your budget. There is always an estate agent out there willing to test your resolve when it comes to budget, but it is vital that you resist. Banks set borrowing limits for good reason, and if you spend more than you can afford you might find yourself in a position where your lifestyle is compromised. It’s no good stretching to buy a home outside your budget if you can’t afford to furnish it properly.
UNDERESTIMATING FULL COSTS
Just a few of the additional costs that buyers often overlook are moving costs, home insurance, stamp duty, transfer fees and council rates. Underestimating these figures can seriously hinder your ability to make repayments in the short term.
NOT HAVING A BUILDING & PEST INSPECTION
Always hire an independent house and pest inspector to look over your potential new home, and don’t be too flustered when they produce a long list of issues. Don’t be too troubled by minor faults that are easy to rectify, but look out for major faults that could cause long-term problems. If you’re finding it hard to discern the seriousness of the reported problems, ask your building inspector to give their honest opinion – no one will be better qualified to pass judgement.
The best laid plans can be ruined by inaccurate property valuation. If you’ve committed to purchase a property at auction or signed an unconditional contract, an unfavourable property valuation can force you to borrow beyond your budget. When sourcing your own valuation for a property, always secure the services of an accredited property valuer.
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