Buying a property is a big financial commitment. It is also an emotional and stressful time. So, if you can avoid any mistakes it will help to keep things on an even keel. Your end objective is to find a home that you love, in a convenient location, at a price that fits your budget.
Not calculating how much you can afford
A good property search starts with knowing how much you can spend. The affordability of the loan based on the required repayments ensures that you look only for property that falls within your budget. It also affords you the foundation on which to negotiate or bid if you’re buying by auction.
If you don’t set your budget up front you could fall for a property that is not affordable. This could result in the temptation to overspend. Alternatively, you may feel short changed when you finally purchase the property that you can afford.
Before you even start to look for a property, speak to your home loan lender or mortgage broker. They are trained to assess your deposit, your monthly expenditure, your income and employment history, your assets and liabilities and your credit history. They will use this information to estimate what repayments you can afford and, by extension, what loan you will receive.
They can also help you to get pre-approval for a mortgage. This will ensure that when the right property comes along you will be ready to make an offer knowing that you have already arranged the finance.
Not looking for the best home loan option that you can find
It’s important to do your research before you take a loan. You can save thousands of dollars over the term of the mortgage by shopping around. Right now, interest rates are low and the market is competitive, so make sure to get the best rate available.
Mortgage brokers offer home buyers a great resource as they have dozens of lenders on their books. They can often find you interest rates better than those advertised. They also know what the lenders look for in a client so they can put you onto the lender that is most likely to approve your loan. Remember, that a failed loan application can have a negative effect on your credit rating, so it is important to connect with the best lender.
Offering too much because you have failed research the market
If you fail to do your research, understanding the market and the neighbourhood and investigating the current price of properties on the area where you plan to buy, you risk paying too much for the property.
You must also find out about planned infrastructure changes and estimate their impact on the property market value. These changes could, for example, increase the amount of traffic along with the noise and air pollution and negatively impact on the value of houses in the area. Alternatively, they could improve the accessibility to your home and enhance the value.
It is also always good to understand the crime levels in the area. You can obtain most of this information on the internet or by contacting your real estate agent.
Failing to do due diligence
You must know what you are getting into before you buy. Unless you hire a qualified building and pest inspector to check the property out before you buy, you could end up paying a large amount of money to fix structural problems after you’ve bought. Inspectors are trained to look for building faults that you may have missed.
A solicitor or conveyancer should check the contract of sale before you sign yourself into a deal that you’d rather not have.
While you may choose to buy the house despite issues picked up by the experts, at least you will know what they are so that you can budget for modifications required after the purchase.
Make too high an offer
When there are many buyers looking for houses, you may be tempted to offer the seller more than the house if worth, especially if you really like the property. The problem with offering too much for a property is that your lender may value the property beneath what you have offered. Further down the track, you may also find that you can’t sell the property at a price that will allow you to settle your mortgage in full.
The only way to avoid offering too much is to fully research the market. You must know what other similar properties have gone for in the market before you make an offer.
Buying an unsuitable property
The home you buy must suit your family and your lifestyle requirements as well as your finances. Don’t be tempted to make a quick offer without fully understanding how the home will fit with your lifestyle requirements.
It can be expensive to get out of a bad choice of property so make sure that the property suits you before you make an offer.
Taking time to make the offer
If you find a property that ticks all the boxes, don’t drag your feet in making the offer. Someone could take the property right out from under your feet.
Ensure that your finances are approved ahead of time and do your research upfront so that when you find that perfect house, you’re ready to make an offer.
Don’t give up
Because only one person can buy each house, you may be disappointed and not get the first house that takes your fancy. That’s not the end of the world. Keep on looking. Your dream house is out there. You just have to find it