3 common first home buyer mistakes
Purchasing your first home is one of life’s great milestones, up there with graduation, getting married and having children. Just like any achievement, it takes a lot of time, effort and can be a very stressful process!
Research from the Australian Bureau of Statistics shows that in the 40 years to 2007 our nation consistently had one of the highest rates of home ownership in the world, and this is unlikely to be any different today.
In spite of the obvious popularity of owning a home, the constantly evolving property market can be a fickle thing. Sometimes even expert investors can make blunders, so here are a few of the most common mistakes made by first time buyers.
Being unaware of first home owner grants in different states
In 2000, the federal government introduced an initiative to help first time buyers onto the property ladder. Requirements, conditions and the amounts offered do vary from state to state so it is important to enquire with your local authority.
Despite this, people often don’t take advantage of the government funding. Reasons vary, from not meeting the requirements, to buying a home that isn’t included in the financial backing or simply not being aware. For example, if you were buying your first home in NSW you could be eligible for a $15,000 grant, provided the home’s value is below $650,000.
Spending more than they can afford
Often first time buyers commit to a property for sale without fully understanding their financial position, or the ongoing costs of owning a home. Expenses like insurance, council rates, stamp duty and unexpected repairs can all add up, so it’s important that you don’t spend all your money on the initial purchase.
Getting your home loan pre-approved can be a good way of protecting your financial future. Knowing your maximum limit before entering the property market means you will be aware of your boundaries and know not to exceed them. It’s likely that you had an effective budget in place for saving your deposit – now you can use it for planning your mortgage repayments.
Not analysing the local market
Given the significance of a purchase, it makes sense to be well informed before you buy a home. If you’ve found an area you like, you should get to know it and the market in general like the back of your hand via market reports, blogs and books.
Find the answers to questions like: What have prices been like in the past? How does it compare to surrounding suburbs? Are there any future developments in the area like new infrastructure? Real estate agents will also be able to give you an idea of the current trends, values and growth in the area.