Most Common Mistakes First Homebuyers Should Avoid
First home buyers don’t have the advantages that second home buyers do. But it’s buying their first home that gives second home buyers the hindsight of knowing exactly what to watch out for next time.
If they could go back and do things differently during their first home purchase, they’d probably warn potential first home buyers to avoid making these top two judgement errors.
#1 mistake: Buying a house you can’t afford.
Peer pressure and well-meaning advice from family members and friends, optimistic real-estate agents and even lenders can prompt you into getting into the property market as quickly as possible, even with a tiny deposit.
But what you may not realise is that not saving at least a 20% deposit means that you will have to pay more in the form of Lenders Mortgage Insurance (LMI) premium, on top of your loan amount. Plus, you miss out on the opportunity to negotiate better loan terms.
You’re the only one responsible for repaying your home loan for the next 25-30 years, and saving a 20% deposit is an excellent way to demonstrate to yourself that you can handle this lifelong financial commitment.
#2 mistake: Buying the wrong house.
Yes, attending house auctions and being outbid every time and watching houses snapped up at insanely high prices can be frustrating. The fear of missing out can sometimes lead to making an unwise decision of bidding beyond your budget and settling for a home you’re not entirely happy with.
You may overlook all the faults… too small or needs work to make it liveable… You convince yourself that this is a temporary compromise, you’ll live there a few years and then move. It usually isn’t temporary, and if you can’t live comfortably in the house you’ve purchased, for at least 10 years, you’re going to be unhappy with your decision.
If you plan on selling in a few years, the cost of buying and selling will most likely leave you out of pocket.
That doesn’t mean you shouldn’t hold off buying your first home. Knowing your limit, what you’re looking for in your new home and the sense of freedom that lies ahead from not having to house hunt anymore and having a place to call home, makes it all worth it.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for information about the best options for you when it comes to your mortgage.