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12 Mistakes First Home Buyers make

Buying your first home can be daunting and sometimes most of us don’t know where to start. Here are some of the steps you can take to make buying first home a lot more easier and organised.
1. Get a pre-approval

It’s really important that you, firstly, get a pre-approval. A pre-approval is a written assessment of your borrowing capacity. It is strongly recommended to use the services of an experienced broker. This pre-approval will give you an idea that how much lenders are willing to lend to you. A number of things can affect your borrowing capacity like the type of job e.g. FT, PT casual etc. It also depends upon your credit score, other liabilities, no. of dependents, living expenses and if you are single or married.

 

2. Do your research

When looking for a home loan don’t get attracted by deals that look too good to be true – most of the time they are! The broker can offer you a choice of lender and you don’t have to do the legwork.  Make sure the loan is right for you and your circumstances.

 

There are many loan mortgage rates that look great, but they have eliminated all other privileges

 

3. Don’t make to many credit enquiries

Once your lender/s assess your credit and your deposit, they will calculate how much they will lend you. One critical criteria a lot of lenders use is a credit score. Too many enquirers will lower your credit score and you may have difficulty getting your loan approved particularity if you’re borrowing over 80% and require Lender Mortgage Insurance (LMI)

                                         

4. Consider using a good buyer’s agent

A buyer’s agent can provide you with the information you need to make a decision about a property and its value.  This can save you a lot of time and stress but not necessarily money as they are not free.

 

5. Changing jobs

There is a certain criteria when the lenders assess your suitability for a loan and main point is the length of employment. Changing jobs wouldn’t be the best idea during this period of time. This is particularly the case if you are a contractor or casual and you are job hopping. The choice of lenders will be less during a probation period.

 

6. Maternity leave

Most banks will decline your loan application outright because of the associated risk that you may not return to your job. Another reason is that they are unsure about your income once you return to work.

There are only a handful of lenders that will consider your income when you return to work but they have additional criteria.

 

7. Underestimating the cost of buying and owning a house

After you purchased the home you pay for more than just the cost of the house. There are additional costs associated with buying a house. Some of these include:

  • Home insurance
  • Relocation costs
  • Building and Pest reports
  • Stamp Duty
  • Council Rates
  • Water rates
  • Lender Mortgage Insurance (LMI)
  • Conveyancing cost
  • Transfer fees

 

8. Getting emotional

One of the many things real estate agents are good at figuring out is how much you love the property. Don’t show much emotion when inspecting the property and keep it to yourself. If the agent is aware that you love the house, they will gain the upper hand in negotiations and can cost you more than the property is worth.

 

9. Building and pest reports

It is absolutely vital that you get these reports so that you know the condition of the property before buying it. A professional building and pest inspector will conduct an in-depth inspection of the property.  You will get a written detailed report of the assessment, indicating if there are any issues/ problems with the property and approximate costs of repairs if any. If there are issues, you can negotiate with the vendor.

 

10. Rushing to sign contracts

Warning: Don’t sign anything before you have read the contract. Loan agreements are extremely important documents as they contain all of the terms and conditions of the mortgage including your obligations, costs and features. Similarly, the contract of sale is another document you should read or get help from your conveyancer.  You can sit down and read it with your agent and ask them questions you are unsure about. It is even better to make a list and email it to broker/agent. Doing this can save you money and stress.

 
Warning : Don’t sign anything before you have read the contract.

 

11. Borrowing too much

One of the main criteria when considering how much to borrow is to look at what you will be willing to afford, not how much money lenders are willing to lend to you.  Make sure that you are comfortable with the mortgage repayments. Also, you need to factor in any major expense you may have in future.

 

12. No or minimal savings

Also, one of the common mistakes borrowers make is that they borrow too much and have little or no savings. It is always a good idea to have an offset account with the loan and save as much as you can. Offset account will offset interest on your home loan and you will have the flexibility to use when needed.

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