Are you making these mistakes?
Buying a new home is a really big deal. After all, whether it’s an investment property or somewhere you are going to live in, if you make a mistake it could cost you big dollars.
To help avoid this cost we thought we would put together a list of common mistakes people make when buying a property. Read this carefully and make sure you have a plan to avoid these issues.
Not sorting out your home loan and budget BEFORE you buy
We know that house you are looking at is beautiful but don’t commit to purchasing it until you know that you can get a loan for the purchase amount. It’s really important you understand how much a bank will lend you, how much deposit you will need and how much your repayments will be.
These critical pieces of information will help you set out a budget for one of the biggest purchases in your life!
As you build this budget it’s also important to plan for the inevitable extra costs of buying a property. These costs can add a lot to the purchase price so you need to plan for them or you could have a budget problem.
Some examples of extra costs are:
- Government stamp duty
- Building inspections
- Pest inspection
- Legal fees
- Valuation fees
- Bank fees (although we will try to negotiate these down as much as possible for you).
Also make sure you consider ongoing ownership costs like council rates, home and contents insurance and the inevitable repairs that will be needed from time to time (isn’t it great when a massive rain event results in a leaky roof!).
Speak to us BEFORE you buy as we can help structure your loan to take into account the total cost of buying your new home or investment property. We can let you know what banks will be willing to lend you and the impact this might have on the price you can offer. All while ensuring you find a great rate for your situation. Start here.
Not shopping around for your home loan
With so many home loan lenders in the Australian market you are crazy if you don’t spend the time to compare your options – you can save serious money if you do.
Importantly, by shopping around you might be able to lower your monthly repayments or pay off your home loan sooner so it’s worth the effort. Of course, we can do the shopping around for you by starting here.
We also have a great article on how to compare home loans.
Not doing proper research
We cannot emphasise this enough. It’s so important to properly research a property before you make an offer or bid at an auction. Otherwise you may get a nasty surprise after purchase.
Here are some things to consider:
- Get a building inspection. This can be one of the most important things you do. We have heard of cases where a building inspection has found major issues with a property that could take thousands of dollars to fix. Best to know these things up front and factor them into your budget. A building inspection is a must.
- Pest Inspection. Just like a building inspection, you don’t want to discover your dream home has a termite problem.
- Is the property in a flood zone? Don’t wake up in bed one morning with water at your feet!
- Check with the local road authority to see if there are any road works planned on the street or any new roads in the area. You don’t want to find out later that a new freeway will be going right past your front door.
- What is the zone of the property and neighbouring properties? We know of one client who was just about to purchase a property when they discovered that new local planning laws meant that a 5 story building could be built right next door. If they hadn’t done the research they would have lost a lot of money when that office building was constructed.
- Major local area changes. Is there any major construction or changes going on in the area that could affect the property value? For example, a new shopping centre, local swimming pool/recreation centre or improved public transport might improve values.
- Schools: The schools in an area can have a big impact on valuations. We know of one suburb that parents are desperate to move to just so they can get into the zone for the local high school.
Can you save on your home loan?
Not Researching Property values
We thought we would call out this separately as it is so important to research the value of similar properties in the area. This can give you a feeling of what the right price to offer will be and avoid overpaying.
You can purchase local property valuation reports and there are many free online property valuation tools like propertyvalue.com.au.
Look for recently sold properties that are like the one you are considering. Compare land size, number of bedrooms, car parking, living areas proximity to public transport and major roads.
Pro tip: When comparing prices of recently sold properties make sure you consider the condition of a property. If a property needs a major renovation it most probably went for a lot less.
When looking at suburb price reports check to see recent trends. Consider questions like:
- Are property values going up or down?
- Is there a lot of new homes being built in the area?
- Are apartment prices rising faster or slower compared to home prices in the area?
- What about surrounding suburbs and their price trends?
- Could a little further out be a lot cheaper?
- If you are an investor look at the rental yields and the vacancy rate to see if what sort of return you could expect.
These are just some thought starters. It’s critical to think through all the factors that could impact local values.
Once armed with this information you’ll be able to form a clear view of what the property you are looking at is worth and avoid overpaying.
Didn’t consider the future
Spend some time thinking about not only what you need in a home today, but what you might need in the future. This is important because it can be expensive buying and selling houses and it’s best to minimise the number of times you do this in your life.
So, there might be just the two of you now but what if in a couple of years you have children. You might need more bedrooms or space for kids to run around!
Now you have to be careful about considering the future. In planning for those extra bedrooms and a backyard for future children you might well end up in a price bracket you simply cannot afford right now.
The important thing to do is balance future needs and your budget in the right way for your situation.
Not Getting along with the real estate agent
Many people distrust real estate agents and as a result keep them at arm’s length and don’t really engage with them.
We think this is a big mistake.
Real estate agents have amazing knowledge of the local area and the state of the current market. Make an effort to get to know some of the good ones and ask them about the market and what’s going on. You’ll be amazed at what you learn.
Another hidden benefit is that they will let you know about properties that are being sold “off-market”. Sometimes property owners don’t want to go through the hassle of selling their property on the market so they elect to ask an agent to contact known buyers to sell the property privately.
If you have a relationship with an agent it’s likely they will call you to let you know about these unique opportunities.
Don’t forget to keep in mind that the real estate agent has a duty to represent their clients.
Start making connections with good agents in your target area today and you’ll soon get some great up to date information.
Can you save on your home loan?
Letting your emotions takeover
This is a really hard one. If you love property as much as we do you know it’s so easy to fall in love with a house or apartment in a great location. You quickly start to imagine your new life in the property and pretty soon you are paying way more than you planned.
There is nothing wrong with falling in love with a property. Just make sure you don’t make one of the mistakes above as a result of all that love!
Think about these 7 mistakes and make sure you don’t make them!
Of course, we can help you with mistake number 1 (getting a home loan) and mistake number 2 (shopping around for a home loan). Simply spend 2 minutes answering some quick questions and we’ll do all the hard work for you.