13 Feb TOP 3 MISTAKES MADE BY FRIST HOME BUYERS
Buying your first home is an exciting time. It may signify independence, escaping poorly maintained rental property, unhelpful landlords and paying off someone else’s mortgage. It may represent security, wealth creation and achieving the great Australian Dream.
No matter if you are a young first home buyer, or a mature older buyer! If unprepared, the first home buyer generally makes the same mistakes!
#1: Not having a clear understanding of how finance works
What you think you can afford and what the bank is willing to lend you may not be the same, especially if you have debt or unstable income. Knowing what you can borrow before looking at homes will allow you to make the most informed decisions. Be aware that even if you have been pre-approved for a home loan, this is generally subject to certain conditions and may not complete due to valuation of the property and or due to changes in your position such as, obtaining additional credit or changing your employment status.
#2: Borrowing too much
Many first-home buyers make the sometimes-fatal mistake of borrowing to their limit. This can stretch your finances and leave little to make your house a home. Without the capacity to make improvements, purchase furniture or afford a life style, the gloss and excitement of a new home can quickly dull and become a burden. Worse than this if faced with unforeseen financial problems, it could mean having to sell your home at a loss, losing any equity you may have contributed or accumulated in your home.
#3: Underestimate the cost of purchasing a home
It is so important to generate a scenario, with a spreadsheet up front, that will detail all the fees & costs and highlight how much cash you will need to complete the transaction. If there is a construction involved, the one cost that most first home buyers neglect to consider or budget for is the “in course of construction interest”. Loans are drawn down at land settlement and progressively through construction and these loans attract interest. Once again it is so important to calculate and forecast this interest up front of any commitment in order not to be short of cash. And then of course there is the quarterly rates and water notices applicable after land settlement.
You need to get some professional advice to make informed decisions, that is why we are here for. Talk to us today.