10 common house buying mistakes
Buying property can be incredibly daunting because it's easily the biggest financial decision you'll ever make.
Common mistakes when buying a house
Buying a home is often the biggest purchase you can make in life
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.
1. Choosing the wrong home loan
- Fixed versus variable rates
- Principal and interest payments versus interest only loans
- 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!
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.
2. Being influenced by your emotions
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 the 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. the number of bedrooms, the location, the right price) to help you avoid making an overly emotional decision.
3. Borrowing beyond your budget
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 of debt.
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.
4. Not doing your research
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.
5. Underestimating additional costs
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, agent fees, 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.
6. Not getting a loan pre-approval first
Don't waste your time home hunting until you have checked out your home loan options. Your borrowing capacity will dictate the houses you can afford, so you won’t waste time looking at houses that are out of your price range. While it's not a guarantee of getting a finance, home loan pre-approval is an important step demonstrating you application fits a lender's criteria.
7. Not getting a building and pest inspection
There could be something wrong with your property that’s not visible to the naked eye. No one wants to end up with a property full of defects and problems.
Obtaining a building and pest inspection will help you determine the physical condition of the house, as well as saving money on major unexpected repairs.
8. Not getting professional help
Make sure you use appropriate professional services to ensure a smooth and easy process when buying your home. A conveyancer and a professional building inspector are some of the specialists that you should use.
9. They don’t think about the home’s resale value
When looking for a house, you shouldn’t just look with a buyer’s perspective but you should also look with a seller’s perspective because very few people stay long enough in their homes to completely pay off their mortgage. It’s best to consider the selling potential of a home so it will be easier to sell the house if you need to.
10. They don’t know about their easements and boundaries
Another thing that some homebuyers skip is finding out information about easements and boundaries. You may not know that you are actually not allowed to park or to build a fence in a certain area of your land, so it pays to know what your limitations are to avoid problems.
*https://www.commbank.com.au/about-us/news/media-releases/2013/are-aussie-home-buyers-leaving-their-emotions-at-the-door-when-buying-a-property.html
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About the article
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.
