We all make mistakes. However, if there’s one aspect of our lives where we want to avoid mistakes it’s purchasing what is likely to be the greatest financial asset you will ever own – your home. If you are in the market to buy your first home, it pays to be mindful of the most common mistakes other first homebuyers, how to avoid them and what to do instead.
1. Failing to do the necessary research
It’s easy to get caught up in all the excitement of buying your first home. It’s a milestone in your life you will never forget. The danger, however, is to let your heart rule your head. Doing your research is not just restricted to the market. It also means being very clear on your budget, understanding the various loan options available to you and researching the areas you would like to live in, including any future plans for those areas that may affect you.
2. Acting on impulse
Some first homebuyers feel pressured into making a swift decision, despite not being 100% sure that they are making the right one. Take your time to find what’s right for you. You will know the right one when you find it. Think very carefully about what you are looking for. Write a list of ‘must haves’ and ‘nice to haves’. Your ‘must haves’ are not negotiable. For instance, if you decide your first home must have a fenced backyard with some lawn area because you have a dog, don’t settle for a home with a paved courtyard. That being said, you also need to realistic, understanding that your first home is unlikely to be your forever home. There are likely to be some compromises that need to be made to get your foot on the property ownership ladder.
Borrowing more than you can afford is another pitfall to avoid. Many first homebuyers make the mistake of over-extending themselves financially with their first property purchase. The last thing you want is constant stress worrying about how to pay the mortgage repayments each month. Even if a lender is prepared to let you borrow more than you think you need because it looks like you can afford it on paper, don’t be tempted, as you will end up feeling financially insecure and potentially resenting your decision. Establish a firm budget and stick to it. This is especially important now with interest rate rises on the cards in the not too distant future.
4.Forgetting to factor in the extra costs
Many first homebuyers neglect to factor in the additional costs associated with a home purchase. Costs over and above the sale price can include transfer duty, rates, building inspections, loan application fees, mortgage insurance and moving costs. All of these costs must be factored into your budget.
5. Neglecting to read the contract in full
It is vital to be aware that the contract you will sign when finalising the purchase of your first home is a legally binding contract. That means you can’t change your mind or request certain conditions once signed. So, it is extremely important that you read the entire document before signing and ensure you understand all the terms and conditions of the sale. Sit down with the agent selling the property and read through the contract with them, asking questions if there is anything you don’t understand. There is no such thing as a silly question when it comes to finalising something as important as a property purchase.