With daily news stories about skyrocketing house prices and properties being snapped up sight unseen, many first-home buyers are left wondering if they’ll ever secure a place to call home.
In today’s rush to buy real estate it’s more important than ever to ensure a “fear of missing out” doesn’t lead to the seven common mistakes that might leave you thinking buying a house was a mistake.
1. Choosing the wrong home loan
Given a new property is probably the most expensive purchase they’ll ever make, it’s amazing how many people fail to shop around for their home loan.
There are a lot of factors in play, from fixed versus variable interest rates, to offset accounts and redraw facilities. Just getting your head around the lingo can be daunting.
With most mortgages in Australia taken out over 30 years, it’s crucial you take the time to understand the ins and outs of lending and scrutinise the fine print to ensure your loan will suit your needs well into the future.
The saving grace if you fall into this house buying mistake is you can always refinance later to take advantage of a better offer, but be aware there will be fees that could eat into any gains.
2. Over investing
In this heated market, it’s easy to spend more than you expected to secure a home, after all, if you don’t buy now, prices are only going to go up, right?
With record-low interest rates, lenders are likely to offer more finance than they would have even two years ago.
It’s important to do your own calculations, not just accept the maximum your lender puts on the table.
Sure, government regulation means a lender can’t lock you into a loan you can’t afford but are you happy to miss out on takeaway coffee and your planned holiday to make the repayments?
Keep in mind today’s low-interest rates won’t continue forever. Even a small rate increase on a loan you can barely afford could land you in the proverbial hot water.
Compare competitive rates from over 25+ lenders
3. Considering the resale value
One of the biggest house buying mistakes is not considering resale potential.
At some point, whether a new job in another area, children, or a pay raise, you might want to sell up to relocate. Can you reasonably expect your home to increase in value so you can afford the move?
Before buying, get to know the neighbourhood.
What are other homes in the area selling for? Have they held their value over time? Is crime a problem? And are there developments on the cards that may make your home more attractive (a new shopping centre) or less attractive (a new highway right next door) in the future?
Unlock your suburb's demographic profile
This information is a guide only and is an estimate only based on the past 12 months of aggregated online mortgage enquiries from eChoice and partner programs.
Speak to a home loan specialist today
Submitting your enquiry
An eChoice home loan expert will be in touch soon.
4. Being influenced by your emotions
Countless thousands of Australians have made the mistake of buying a house with their heart, not their head – after all, it’s easy to fall in love with hardwood floors and granite benchtops or the surround sound system in the home theatre.
Once your emotions are in play it’s human nature to take a “do or die” approach to buying and end up paying more than you can afford.
When buying a home, it’s a good idea to have a list of non-negotiables. Things like the number of bedrooms, if an ensuite is important, or if you’re prepared to renovate to improve the kitchen.
Your dream home may turn into a nightmare if you have to fight bumper-to-bumper traffic to get to work or the kids’ soccer training.
5. Forgetting about the other costs
Apart from the obvious deposit and repayment terms, there is a heap of other expenses that can make buying a home a big mistake.
You’ll be up for loan establishment fees, conveyance costs, and stamp duty, at a minimum.
Then there are the ongoing expenses of council rates, insurance and maintenance, not to mention the soaring electricity bill that might be associated with that “must-have” home theatre!
If you’re looking at a home that needs a little TLC, you’ll also need to factor in if and when you can afford to make the improvements.
6. Not getting a loan pre-approval first
You can spend countless hours house-hunting, but it’ll all be for nothing if you can’t afford the properties that are in your sights. A loan pre-approval is therefore a must.
While it’s not a guarantee of getting finance, it will give you a pretty good ballpark for what money is at your disposal so you don’t waste time, and emotion, on open homes that are out of your price range.
A pre-approval will also give you a head start when you do find your first property, letting you put in an offer before it is snapped up.
Buying Your First Home?
Download our 15+ page guide today!
7. Forgetting to do your due diligence
You know you’ve made a mistake buying a house when you move in to discover the skirting boards are hiding termite damage, the fine cracks in the walls mean the foundation is sinking, and asbestos lining the eaves will add thousands of dollars to your planned extension.
While an added expense, a building and pest inspection is money well spent if it means you avoid buying a dud, or a property you’ll need to pour thousands of dollars into repairs.
It’s also a good idea to find out if you can actually use your entire property! Many people are unaware local councils, utility companies and even neighbours, may have rights over part of their land, called easements.
There may also be underground connections, drainage, or sewerage infrastructure that will mean you can’t add a pool where you’d wish, or raise the height of a fence.
Check with your local council to find out if there are any limitations to be aware of.
Words by Erin Delahunty
On the lookout for a home loan? Try contacting an eChoice broker. With access to 100’s of mortgage products from over 25 lenders, eChoice brokers have the resources to find YOU the right home loan deal.