By Richard Whitten | Home Loans & Property Expert at finder.com.au
Buying a home is a complex process. A lot can go wrong. Avoiding these eight mistakes will help you buy the home you want with a minimum of stress.
1. Entering the market without a clear strategy or goal
Every home buyer needs a plan. And no, “buying a place to live” isn’t a plan. Before making the biggest purchase of your life, work out exactly what you want to purchase.
You need to think about the lifestyle you wish to live, the type of property that suits this lifestyle, the area you wish to live in, and how factors like commuting and distance from family will affect you.
Will your property be used purely as a home? And for how long? Are you planning on having kids soon, or turning the property into an investment? All these questions will affect how you approach the home-buying process.
2. Failing to get pre-approval
This is a huge mistake. Getting pre-approval shows you’re serious about purchasing a home. It means your lender has given you conditional approval to borrow a set amount of money. This means you’ve got some idea of your borrowing capacity, and that when you find the perfect property you’ll be ready to snap it up fast.
3. Not comparing your home loan options
The details of your mortgage matter almost as much as the property itself. Educate yourself on the various home loan products on the market and find the right type to match your strategy.
Then you need to compare interest rates, fees and features to find the best quality mortgage for you. You should never settle for the first home loan you see.
4. Blowing your budget
Finding the perfect property and then stretching well past your budget to buy it is a serious mistake. While you should never settle for a property you don’t want, the perfect property is ultimately one you can afford.
Make a realistic budget and stick to it. If you do find your dream property and decide to stretch past your budget, be sure to crunch the numbers again and make sure you can really afford it.
5. Going it alone
The path of the property buyer doesn’t need to be a lonely one. While the real estate agent works for the seller, buyers can make use of buyer’s agents. They act as a guide and advocate on your behalf, helping you find a property and negotiate a price. They can even bid at auctions on your behalf.
If the process of finding and apply for a home loan seems too hard (or you don’t have time), a mortgage broker can help you out.
6. Falling in love (for all the wrong reasons)
It’s easy to fall in love with a great property. The danger comes when you swoon for a property based solely on a feature you don’t really need. A house may come with a beautiful, high-maintenance garden, but if gardening isn’t really your thing then this attractive feature could become a burden very quickly.
The key is to remember your goal and needs in the first place, and draw a clear line between necessary features, nice-to-haves, and features that really don’t matter at all.
7. Factoring in repayments and nothing else
Calculating your monthly repayments is very important, but there are so many other costs that come with buying a home. Be sure to factor in council rates and strata costs, ongoing home loan fees, moving costs, stamp duty, registration fees and conveyancing costs when planning your budget.
Have a cash buffer that can cover all this and more, or you’ll risk falling behind on repayments or running out of money completely.
8. Skipping the fine print and inspections
Never buy a property without doing due diligence on the contract. Hire a conveyancer to check all the paperwork and make sure the contract has all the required provisions.
It’s also vital to get a building or strata inspection before making a purchase. Failing to get a building inspection is like buying a used car without even turning on the engine.
About the author: Richard Whitten is a member of the home loans team at finder.com.au. His role is to explain all the complexities of the home loan industry in ways that help consumers make better life decisions.