Whether it’s a new apartment or an old one – or even a house in the outer suburbs – finding an affordable home isn’t easy for anyone starting out. And in all the excitement of house hunting, it’s all too easy to make mistakes. The following tips are designed to put first-home buyers on the path to achievable and manageable property acquisition:
Gain pre-approval
Just knowing you qualify for a home loan is not enough. Before you start looking at properties, go to lenders and find out how much they are willing to lend you. This will help you focus your attention on houses you can afford, so you can avoid the disappointment of finding your dream home and then learning you can’t have it.
Understand your mortgage options
Getting a home loan may be easier today than it was in the past when you had to save for years for your deposit. But it’s also riskier and can be more expensive. A no-deposit loan comes with the added cost of mortgage insurance. You might like to ask yourself: would I be better off making a deposit and saving on the ongoing cost of mortgage insurance? Get advice from a variety of lenders and discuss all your options with them.
Don’t borrow beyond your means
Sometimes first-home buyers make the mistake of borrowing beyond their capabilities. This can stretch your finances to the limit and will not allow you to make improvements to your property when you move in. Worse still, you might not be able to afford to enjoy life in your new home. If you face unforeseen financial problems, it could mean having to sell your house before you have substantial equity in it.
Be proactive
Many first-home buyers will benefit from being proactive and doing independent research. In addition to getting in touch with professional real estate services, you can find auction results and past sale prices online. If you narrow your searches down to the suburbs and even streets where you want to buy, you can find out what properties are selling for. When a vendor’s agent, who will always be acting on their client’s behalf, gives you a price, you will be in a position to make a realistic counter-offer.
Get a pre-purchase inspection report
Some of the best real estate deals are older homes that need minor or cosmetic repairs and renovations. Some of the worst deals are older homes that need costly major repairs. Those major repair jobs might be hidden from view. Saving a few dollars by not getting a pre-purchase inspection report from an independent building inspector can cost you thousands of dollars after you move into your home. To be on the safe side, have a pest inspection carried out as well.
Don’t underestimate additional costs
When you buy a home, you pay more than just the cost of the house. Some additional costs include:
- home insurance
- moving costs
- inspection reports
- stamp duty
- council rates
- transfer fees
Know your costs and budget ahead of time and you won’t be losing sleep when you move into your new home.
Remove emotion from the equation
Buying your first home is an emotional experience, so it’s too easy to let your emotions blind you. Take your cue from lenders to home renovators, who think of only one thing when they buy a house: “What will my return on investment be?” If a professional doesn’t think a house offers a good return on their investment, they walk away.
If you are in the process of looking for your first property, give one of the RealWay Team a call so we may be of assistance. Property is our profession.
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