When it comes to purchasing your first home, it is one of the most costly purchases that you will make in your lifetime. Such large purchases can be very daunting and complex. Many first home buyers are poorly prepared to ensure that they are making a good purchase decision, and it is unfortunate to see these first home buyers make mistake each year.
Through this article, a list of common first home buyer mistakes has been compiled along with their solutions and tips on how you can steer clear of them yourself. As a novice buyer, take the time to understand what comes with purchasing your first home so that you can stop the cycle of making expensive mistakes along the way. Speak to a reliable financial adviser in Sydney today!
Searching For A Home Prior To Obtaining A Pre-Approval
Failing to obtain a pre-approval prior to searching for your home means that you could possibly lead to neglecting on a house that you really love whilst trying to deal with your home loan. There are cases where many home buyers make the error of placing down a deposit or, even more unfortunate, signing a contract of sale before getting pre-approved. Doing so places a large amount of risk on losing your deposit if you happen to not get a home loan approved before the settlement period.
Ensure that you get pre-approved before looking for a home. Pre-approvals are generally effective for between 90 to 110 days which ought to be plenty of time to make a determined decision.
Not Having Enough Savings For A Deposit
Purchasing a home in Australia can be very expensive. Many lenders require a deposit of at least 5% of the home’s price from genuine savings collected over 3 to 6 months. There are also additional concealed costs that need to be taken into consideration. A majority of first home buyers are not prepared and are not prepared to put aside such a large amount of money over a small period of time. If you do happen to place a low deposit down, it usually means an increased interest rate and will set you back more in the long run.
The optimal solution to this common mistake would be to have a plan of action ahead of time and save at a minimum 20%-25% of the home’s value. Although, if you are unable to save such an amount, another solution would be to ask family members to take part as a guarantor on your home loan. A guarantor accepts to repay your debt if you should fail to make your repayments, allowing you to save on lenders mortgage insurance and providing you with enhanced ability to cover extra costs of purchasing a property.
Attempting To Purchase A Home On Your Own
When purchasing your first home on your own, there is a chance that you will miss an important step in the purchase process. Many first home buyers will ultimately lose money due to the fact that they didn’t find the best deals on the market as they haven’t sought advice from a lender.
The best option to make the most of your first home purchase would be to contact a mortgage broker. Mortgage brokers have close relationships with a range of lenders and can often negotiate a better interest rate than if you were to go directly to the bank on your own. Brokers have the ability to understand various lenders’ policies and are able to get tough loans approved that banks may typically decline. Plus, mortgage broker services are totally free!
Bypassing Building Inspections
A common mistake made by first home buyers is that they skip on pest and building inspections. Such actions are undertaken to get a headstart or to save money. What many fail to realise is that by doing so, you are ultimately costing yourself more time and money in trying to fix a problem that could have been resolved at the cost of the seller.
To put it simply, never skip your pest and building inspections. Building inspections are undertaken to check for major deterioration in building elements like foundations, floors, walls, and evidence of maintenance and defect cover-ups, mould, drainage issues, water penetration and fungal decay.
Incorrectly Submitting First Home Owner’s Grant Application
Government initiatives such as the First Home Buyers Grant have helped first home buyers enter the property market. It has been found that more than 80% of First Home Owner’s Grant applications have been submitted incorrectly the first time around, which causes a delay in home settlement.
Mortgage brokers are able to provide you with advice in regards to this grant on whether you qualify, how much grant you will receive, how to apply and also when you will receive your grant. Save yourself the hassle and prevent any delays in your home settlement by seeking services from a reputable mortgage broker.
Are you a first home buyer ready to acquire services from a reputable mortgage broker?
With multiple errors that can occur when purchasing your first home, such as taking advice from the wrong people or even forgetting to secure pre-approval, it is important to obtain services from a reputable mortgage broker. Mortgage brokers are available to help you discuss your first home opportunities and provide you with assistance in accessing the first home application process.