With a twenty-year career honing my skills in every aspect of the property industry I know what makes a property worth buying and how to get the best deal. But unfortunately not everyone does.
I bought my first property in the NSW Blue Mountains when I was just starting out in my career. Two years later it had doubled in value. Since then I have bought, sold and successfully renovated properties for a profit.
If you’ve been sitting on the sidelines putting off the decision to buy your first home, maybe this year will be your year.
If it is here are my top five mistakes that you should avoid as a first home buyer:
1. Over committing
What you can borrow and what you can afford can be two very different things. Getting a home loan pre-approval is a good first step to understanding what you can borrow and therefore what and where you can buy. In addition, having a well thought out budget that factors in your income and expenses is equally important. Don’t stretch your self to the point of being uncomfortable and not being able to enjoy life but make sure your still have a safety net for any unexpected costs. It’s also important to remember though that if you’re still relatively young, your best earning years are still ahead of you. It’s all about getting the balance right and determining what’s right for you.
2. Paying too much for a property
Without question this is one of the biggest and most costly mistakes a novice homebuyer can make. Unfortunately its also one of the easiest traps to fall into. Luckily though, it doesn’t cost anything more than an investment of your time to avoid. The single best piece of advice for new homebuyers is to spend time online and physically inspecting properties, then following up with real estate agents or checking online to see what they sold for. The more recent the better as it will be a true reflection of where the current market is at.
3. Not understanding all the costs
When you’ve never owned a property before it’s important that you understand all the costs involved, both before you buy and after you move in. Before you can call a property your own there are a number of costs you will need to allow for. As well as your deposit you need to allow for other costs such as legal/conveyance fees, stamp duty, mortgage stamp duty, home loan application fees, pre-purchase inspection reports, lenders mortgage insurance or low deposit premium (where applicable). After you move in, as well as your regular mortgage payment make sure you factor in council rates, utility (gas, water, electricity) costs, insurance and regular maintenance costs as well.
4. Not doing your homework
Making an offer on a property and having it accepted is just one part of the home buying process. As a first homebuyer you might not have a lot of money in reserve. The best way to protect yourself from nasty surprises or unexpected costs down the track is to get a pre-purchase pest and building inspection report done. Spending a few hundred dollars on due diligence before you seal the deal could literally save you thousands down the track.
5. Procrastinating
We all have to start somewhere and there’s no such thing as the perfect property. If you have a tendency to be a perfectionist, deciding on the right property might prove to be a struggle. It’s important to keep in mind though, that your first property will probably not be your last. If it ticks most of the boxes, you’ve done your homework and you can afford it, then ask yourself ‘what am I waiting for?’