When you're essentially putting your life savings into bricks and mortar, there are many things to consider; including a minefield of potential mistakes you want to avoid.
Here are some tips for home buyers on mistakes to avoid making when buying a house in Australia.
It's safe to say many people can find home loans confusing, particularly if you're a first home buyer. As a first time buyer, it can be hard to wrap your head around all the different home loan products on the market. Fixed versus variable rates. Principal and interest payments versus interest only. Split home loans and lines of credit. Offset accounts and redraw facilities. Comparison rates versus the advertised rate. It's enough to give you a headache!
Even if it's not your first rodeo, next home buyers can still make the mistake of not understanding the details of the loan. The variety of home loan products available can be mind boggling, but taking out the wrong home loan has led many a home buyer into a mortgage that doesn't suit their needs.
The good news is you aren't stuck with your original home loan until it's paid off. You can always refinance your loan to another product or lender if you've made the mistake of choosing the wrong home loan for your needs. Get in touch with one of our home loan specialists to find out about our low rate home loans.
Buying a home is one of the biggest decisions you'll ever make. So when you fall in love with a property, you're likely to pull out all the stops to get it - including paying too much to secure it. A survey of Australian buyers* found that 44% paid more for a property because they "really liked it". It's easy to fall in love with the hardwood floors, the size of the kitchen or the enormous master bathroom, but try not to let these little things cloud your judgement.
Focus on the big things that will impact your lifestyle more than a nice kitchen, such as whether the property has good transport links, is close to schools and shopping centres, is near your workplace, etc. Does the property have potential to grow in value?
When buying your next home, it's a good idea to have at least three non-negotiables in a home (e.g. number of bedrooms, the location, the right price) to keep your emotions in check.
Just because a lender says you can borrow a certain amount doesn't mean you should be comfortable with spending that much. Don't rely on the lender to tell you how much you can afford to spend if you don't think you can comfortably repay that amount.
Buying a home that is well out of your price range could easily stretch your finances. It's human nature to want a house that's too expensive for us and there are plenty of real estate agents happy to push you into doing exactly that. But don't be tempted to go beyond your borrowing limit.
Have a very firm budget in mind before you start house hunting to avoid wasting time looking at properties you can't afford.
If you don't research the property market you're house hunting in, you won't know if you're getting a good deal or not. Make a list of the suburbs you're interested in and aim to see as many properties in those suburbs as you can within a two to three month timeline to get an idea of how prices move.
It's also wise to get to know the neighbourhood you're buying into because you're not just buying a house; you're also buying a location. Find out about what the local schools are like, the crime level, what the transport links are like, and any upcoming zoning issues.
The initial deposit isn't the only cost you need to factor in when buying a house. Your home loan also doesn't cover upfront costs so you'll have to make room in your budget to accommodate them.
These include stamp duty, bank fees and charges, building and pest inspections, and conveyancing or legal fees.
Apart from budgeting for the costs of moving, don't underestimate the ongoing costs of owning a property. Rates, insurance and maintenance can all add up.