Are you planning to buy a home for the first time? If so, it’s important to be aware of some of the common mistakes most first home buyers make when they buy a house. We’ve compiled them for you below…
Underestimate the Overall Cost
Most first home buyers think that if they have a 10 percent down payment, they can afford to buy a house, but this is not exactly how it works. Although you can purchase a property with as little as 3.5 percent down payment, it is not wise to do so. What first home buyers don’t always realise is that this comes with an added burden. When you apply for a loan with a small amount of down payment, you are required to sign up for lender’s mortgage insurance (LMI). LMI enables a lender to secure themselves in case a borrower fails to meet his or her financial obligations.In addition to that, there are other costs involved in buying a house, such as a stamp duty, solicitor’s cost, inspection cost, etc. which you’ll need extra money for.
Fail to do a Property Inspection
Being a first home buyer, you should be aware of the fact that it is very important to get the property inspection done before you purchase it, as it can help you save a lot of money in the future. It brings so many issues to light. For example, it enables you to spot any pest damage, water damage, or any other structural faults.
These faults cannot be spotted in normal visits. This is why it is wise to get the inspection done as it allows you to highlight these problems and put you in a better position to negotiate the price. If you manage to get the inspection done by a third party, this will help you identify any issues beforehand and you can easily negotiate the price with the seller.
They Don’t Stick to their Budget
Buying a house should be a memorable experience and not something you will regret in the future. This is why it is important to be very careful about what you can afford and how you spend your money.
Many first home buyers forget to make a budget. Creating a budget is a first thing you should do if you want to avoid financial difficulties. Even if some borrowers have a budget, it is not always realistic or in accordance with their needs.
Keep track of your spending and record every expense to see what your monthly expenses are. When you are fully aware of your expenses, it will be easier to devise a strategy for making repayments on time. When it comes to buying a house, don’t exceed your budgeted price. Incorporate all the cost in your budget and put a small percentage of your income aside every month to tackle unforeseen situations to remove financial pressure.
They’re Not Aware of First Home Owner Grant
Most first home buyers are not aware of the first home owner grant. It is a kind of contribution made by the Australian government to facilitate those who are buying a house for the first time. It enables first home buyers to save thousands of dollars in fees and duties associated with the purchase.
Therefore, seek information about the grant. Talk to your mortgage broker or a financial advisor as they will guide you in the right direction and tell you whether you qualify for the grant or not.
They Don’t Consider Other Aspects
Last but not the least, there are so many things that first home buyers fail to recognise when they are searching for a home. For instance, the demographics of the area where you plan to buy a house matters a lot. If you are starting a family, you would want to live in a place where you can meet the people around the same age group.
If you have kids, it is better to find a house in a suburb that has schools and other facilities in the same vicinity. Similarly, if you look after your parents, having a hospital in the close proximity will alleviate the stress factor.
Other factors that you should consider are the position of the house, public transportation links, development plans in the areas, and more. Speak to our team of experts today for any further advice or information about buying a house for the first time.