1. House hunting before home loan pre-qualification
Starting your property search before getting pre-qualified for a home loan is a common mistake. Without knowing what you can afford, you risk disappointment or even losing out on a deal because sellers don’t take unqualified buyers seriously.
What to do instead: Get pre-qualified by multiple home loan providers to understand your budget and show sellers you're a serious buyer.
2. Not saving for a deposit
Applying for a 100% bond without a deposit puts you at a disadvantage. You may face higher interest rates and start with zero equity in your home.
What to do instead: Save for a deposit to improve your loan approval chances, negotiate better terms, and reduce long-term costs.
3. Borrowing more than you can afford
Overstretching your budget can lead to financial strain, especially if your circumstances change. Undisclosed debts, such as loans from family can also complicate things.
What to do instead: Create a detailed budget, disclose all debts honestly, and prioritize long-term financial health over short-term desires.
4. Not setting a realistic budget
Monthly home loan repayments should generally not exceed 30% of your income. Failing to account for other living expenses and annual cost increases can lead to financial pressure.
What to do instead: Establish a clear and practical budget that includes hidden and variable costs before buying.
5. Underestimating related costs
Homeownership involves more than just loan repayments. There are municipal fees, insurance, maintenance, and other hidden costs like conveyancing and moving.
What to do instead: Budget for at least 10% of the purchase price in additional costs and set aside funds for ongoing maintenance and unexpected repairs.
6. Not shopping around
Jumping at the first house or loan offer you find can lead to missed opportunities. Comparison helps you make informed choices and find better value.
What to do instead: View multiple properties and get quotes from different home loan providers to improve your negotiation power.
7. Ignoring the neighbourhood
The perfect home in the wrong area can become a nightmare. High crime rates, poor infrastructure, or lack of transport options can affect your quality of life and resale value.
What to do instead: Research the neighbourhood thoroughly, drive around at different times, and evaluate access to schools, shops, and public transport.
8. Ignoring long-term implications
Costs like insurance and municipal rates often increase annually. Local developments can also impact your home's value.
What to do instead: Plan for future increases and consider an emergency fund. Choose a property that meets your long-term needs, including family expansion or work-from-home requirements.
9. Not reading contracts thoroughly
Signing contracts without reading them or understanding the fine print can lead to serious legal and financial consequences.
What to do instead: Read all documents carefully and seek professional advice before signing anything.
10. Not doing your own research
A lack of property market knowledge can lead to poor decisions and regrets. Relying solely on others can result in misinformation or missed opportunities.
What to do instead: Use trusted resources like Private Property to learn about everything from saving and budgeting to home maintenance and legal obligations.
Buying your first home is exciting, but preparation is key. Avoid these mistakes and set yourself up for success in your property journey.
