Buying a house is likely to be the biggest transaction you’ll
ever make. It’s an exciting journey, but it’s also full of complexities.
So there are a lot of things that you need to consider and avoid before diving in.
Hey everyone, Kim Quach from Duo Tax,
here for another video designed to help you become a better property investor.
If you’re thinking about buying your first home or just starting out on your property
investment journey, there are some things that you need to know before making the purchase
so that you don’t find yourself making any costly mistakes.
Unfortunately, we’ve found that many home buyers are poorly prepared
when it comes to making their purchase decision.
I’m sure you’ve gotten loads of advice from your parents, friends and work colleagues.
But, we thought we would share some of the most common mistakes first home buyers make.
But, before we start, we want to be clear that this video is for informational purposes.
In no way should you interpret this as tax advice. We always recommend working with a
qualified financial advisor or tax agent to give you the best advice for your situation.
Alright, so the first mistake we find that many first-time homebuyers make
is diving straight into looking for property without proper research and preparation.
Preparation starts with understanding your financial circumstances and future objectives.
Before you even start the house hunt, you’ll need to analyse your existing assets,
calculate your debt and get pre-approved for a home loan.
That leads me to the second mistake: looking for a house before getting pre-approval from a lender.
Many first-home buyers make the mistake of putting down a deposit
or, worse, signing a contract of sale before getting pre-approved.
They put themselves at risk of losing their deposit
if they fail to get a loan approved before settlement.
A pre-approval is usually valid for at least ninety days,
so that’s more than enough time to decide on the property you want to buy.
The third mistake we often see first home buyers make is choosing the wrong home loan.
There’s a big difference between what a lender’s online calculator tells you
and what the lender is actually willing to lend you.
So it’s important to pick your finance package carefully and make sure it aligns
with your financial needs and goals. We suggest avoiding sticking to just one bank.
Instead, get in touch with a mortgage broker who has access to various
lenders and finance products.
Fourth mistake we see home buyers make is underestimating the additional costs
that come with buying property. It’s not just the deposit you have to be worried about.
You have to budget for the loan fees, lenders mortgage insurance if you don’t
have a 20 per cent deposit, stamp duty, strata fees, valuation fees and pest inspection costs.
So, while you’re budgeting for a deposit,
remember to add an extra five to seven per cent of the purchase price to help cover you.
On a similar note, a lot of future buyers forget the costs that come with
owning a home. The mortgage loan repayments are just one cost. You have to pay council rates,
insurance, strata fees, utility bills to maintain the home.
So, in your planning and preparation stage, make sure you are clear about the regular ongoing costs
of your new home. Once you have a good idea of your costs, add this to your monthly budget.
Mistake number six is not organising a professional building inspection.
It’s important to engage a competent and independent professional
to check your potential new home for any major faults.
But look, these inspectors are trained to find faults,
so don’t let minor faults deter you from buying the property,
but keep an eye out for major faults that could end up costing you in the long run.
Seventh on our list of common mistakes is missing out on first home buyer grants.
Governments offer different grants, schemes, discounts and incentives to help first home buyers
break into the property market. They’re there for a reason,
so make sure to take advantage of the benefit.
Each state has its own rules, regulations and application criteria,
so make sure to research which grants you may be entitled to.
When you’re looking at a property, it’s very easy to get caught up in the emotion of it all.
After all, you are buying your first home. Deciding where you’re going to live
is very much an emotional experience.
But, a common mistake that many first home buyers make
is letting that emotion dictate their purchasing decision. Instead, let logic take charge.
So, again, here’s where planning and preparation comes into play.
Make sure you’re clear about what you want, what you need and what your budget is.
This way, you won’t overspend just because your heart tells
you that a certain property is your dream home.
Remember, spending more than you can sensibly afford leaves you exposed
to potential financial shocks, including rises in interest rates.
And finally, mistake number nine is trying to do it all by yourself.
There’s a lot to plan and consider when buying your first home,
which means there’s a chance you’ll miss an important step in the process.
Professionals like mortgage brokers, buyers agents and quantity surveyors like us are there
for a reason: to help you navigate the home buying process for your situation without much hassle.
This list of mistakes is definitely not
an exhaustive one - there are many other issues to consider.
But, hopefully, this will help you avoid
a few common mistakes as you move through the property buying process.
Let me know if you think of any other mistakes you commonly see and share it in the comments below.
That’s it from me!
I’m Kim Quach from Duo Tax, see you next time!