Buying your first home is a major milestone in your life journey. There are numerous decisions to be made and the process can at times be quite lengthy. The initial excitement can fade and you may start feeling a little overwhelmed. But with some careful planning, you can avoid common pitfalls and confidently buy your new property.
Here are some handy tips to consider:
1. Get your finances in order
Don’t let the excitement of buying a new home divert you from your initial preparation. You need to know what you can comfortably afford and determine what your maximum spending limit is. You also need to take into account that the purchase price of the house is not the only cost associated with buying a property. There are additional costs which can vary depending on the value of the property, it’s location, and a variety of other factors. Additional costs may include:
- Stamp duty – there are exemptions for First Home Buyers, and each state and territory has different eligibility rules and discounts
- Conveyancing and legal fees
- Building and pest inspections
- Lending costs including mortgage registration fee, loan application fee, mortgage insurance
- Council and utility rates and so on…..
Now you need to choose a lender or mortgage broker. This decision should not be based purely on the best interest rate. It’s important that the lender or mortgage broker is the right “fit” for you, so you need to shop around. Ask lots of questions until you’re satisfied that they will get you the best deal regarding rates, terms and conditions.
2. Do your due diligence
Once you have your finances in order, you will have a good idea of what you can comfortably afford. The first “shiny new” property you come across may not necessarily be the best option for you. Do your research into both the property and the surrounding area. Make a list of the features you’re wanting and prioritise the non-negotiables. You might want to consider:
- Is it within a preferred school catchment area
- Have there been any major renovations or improvements, and if so were the appropriate permits obtained
- Has the property ever been affected by any significant weather conditions in the past
- Is it close to certain amenities that you require such as public transport
3. Buy with your head and not your heart
Undoubtedly you will experience a roller coaster ride of emotions while you search for your new home. As possibly the biggest financial decision of your life, it is important to remember that purchasing property is a business decision and should be thoughtfully planned and not rushed.
You should have a budget in mind, and you should stick to it. Avoid looking at properties that are outside of your budget – it will only cause you frustration or you may fall into the trap of over-spending which can have a long lasting financial impact. Particularly when bidding for a property at auction. Don’t let yourself get caught up in a bidding war. Work out your maximum spend and stay within that limit to avoid buyers remorse.
4. Think outside the box when choosing a property
Keep an open mind about the type of home you are looking for, and the location. Sometimes the photographs in an advertisement may not truly depict the assets of a property. Only when you walk through a house will you get a true feel for it.
You may also have a preferred location, but in some instances choosing a location one or two suburbs away may save you money and still perfectly suit your needs.
5. The first 3 rules of real estate….location, location, location!
Location is arguably just as important as the actual house itself. The surrounds will impact not only the living experience, but also the investment potential and re-sale value should you choose to sell the property in the future or convert it into an investment property.
Things to take into account may include:
- Traffic congestion and access to main thoroughfares
- Public transport options
- School catchment zones
- Lifestyle amenities such as parks and walking tracks
- Access to shops, restaurants and other entertainment
- Crime rate in the area
- Weather systems such as flooding
Take the time to explore the neighbourhood and pay attention to what other properties look like in the surrounding area.
6. Beauty isn’t just skin deep
Most Vendors will do the best they can to make their property more attractive to buyers. Surface level improvements may include landscaping the gardens, a fresh coat of paint, new kitchen benchtops or polishing timber floors. Although undoubtedly attractive, you should look more deeply into the condition of the property. Avoid future costly renovations by checking significant features such as the roofing, electrical wiring and plumbing.
Be sure to engage the services of both a building inspector and pest inspector. There is added cost, but for peace of mind, it’s worth every cent to avoid being taken by surprise by cracks in the foundations or termite damage.
7. Expect the unexpected
Hopefully the contract process runs smoothly, but that’s not always the case. There are a number of factors at play here. Are you happy with the outcome of the building and pest inspections? Is there a hold up on your finance because of the lenders processes? Are there tenants currently living in the house who need to vacate by the settlement date?
As settlement day approaches, the anxiety may start to build as you wait for everything to fall into place. And sometimes the occasional hiccup may occur.
Make sure you keep communicating with the parties involved including the real estate agent, any professional contractors handling inspections, and the bank or mortgage broker. Staying informed throughout the process allows you to plan for any contingencies should the need arise.
8. Avoid buyer’s remorse
Once the property has settled, you may fall into the trap of second-guessing your purchase. Did I choose the right lender? Should I have bought that other property? Did I pay too much for the house? There may have been a number of decisions you could have made differently. Avoid this train of thought. It’s best to trust that the decisions you made at the time were right for you.
You have gone through a momentous life experience. Appreciate your new home and enjoy the settling in process as you move in, unpack and decide on where to place your furniture. It’s time for you to absorb that you are now a homeowner!