Mistakes first-time homebuyers can avoid making
You’re a first-time homebuyer only once, and you may be nervous about starting the journey, but there are some ways to simplify the process and make it a stress-free one. We’ve compiled a list of “Do’s and Don’ts” for you to consider. Also see How to buy your first home.
Do’s
Be realistic about your current financial situation (and your expenses as a percentage of your income), how much additional debt you can responsibly take on, what features you think you really need/want your first home to have, etc. Being honest and realistic during each step of the house-hunting journey is so important to achieving the optimal outcome for you.
Check your credit score before starting the house-hunting journey. Banks will review this while assessing you as a prospective home loan customer, so check it before you start looking at properties. It is an unpleasant surprise to get at a later stage if you get declined because of a low score. Knowledge is power in this instance. Read more about How to improve your credit score.
Get a pre-approval early on in your house-hunting journey: A pre-approval from GetGo Home Loans takes a snapshot of your current financial situation and calculates how much additional debt you can realistically take on to finance a new home. Using your pre-approval, you’re able to look at those houses you can afford and avoid the temptation of looking at those you can’t.
Use a bond originator once you’ve found your forever home. Our team of Home Loans Specialists can assist you with your application for home finance to as many banks as possible. Using a bond originator not only speeds up and simplifies the process for you, but it gives you negotiating power with all the banks to guarantee you the best rate. Read why you should choose us!
Keep your pre-approval current and updated if it takes you longer to find your dream home, especially if your financial situation changes. If you completed your approval with GetGo Home Loans, going back to them once you’ve made an offer on a property means they already have all your current paperwork. Your application will get to the banks faster than starting over with a new originator.
Calculate the upfront costs of buying a home. Have a separate bucket of savings for the upfront costs you incur when taking out a home loan. This usually equates to 8% of the value of your home loan (and comes in the form of transfer fees, registration costs, etc). You must pay all these costs before you can take ownership of your new home. Use our Bond Repayment Calculator to see how much you can expect to pay.
Stay on top of the paperwork: Keeping current bank statements, payslips and other documents the banks are going to ask for on hand means you’ll be ready to apply for finance literally minutes after your offer is accepted and signed (and this is crunch time!).
Always ask for a discount: if you don’t ask, you’ll never know. This comes to negotiating with a seller on the sale price, a bank to get a better rate than their initial offer, or conveyancing attorneys to discount their fees. You never know!
Don’ts
Let your emotions overrule sensible decision-making. This is critical when it comes to making all home-buying decisions. For example, if you need to counter-offer because the seller didn’t accept your first one, be sure to keep that all-important affordability calculation in mind. It might mean saying goodbye to a prospective home but is safer from a short-term affordability perspective to move on.
Skip the small print. If your offer to purchase or home loan offers from banks seem overly complicated, get the property practitioner or bond originator to explain any confusing clauses/terms to you so that you’re clear about what they mean for you.
Underestimate the costs of owning a home. It’s not called a “big black hole” for nothing. From the upfront costs you’ll pay to secure a home loan, to the instalment and other monthly costs that come with buying a home (i.e. rates and taxes, levies, water and electricity, insurance and ad-hoc maintenance), make sure that you can afford to pay these for the next 20 years (at least).
Avoid late-stage difficult conversations if you’re buying a house with someone else: If you’re buying a house with your spouse or a significant other, make sure you’re both aware of each other’s financial situations to avoid nasty surprises later. Ensure you have a contract in place if co-buying with someone you’re not legally tethered to. Anything can happen, and contracts protect you both.
Be frightened of getting second opinions and using experts to help you make decisions. Whether it’s paying for an inspector to view the property if you’re unsure of any of the structural aspects of a home before making an offer, or asking advice from a GetGo Home Loans Specialist, there is no such thing as a silly question when you’re making such a long-term investment as buying a home.
Let yourself be pressured by anyone in this process. You’re the one investing in property for yourself or your family, and you should be the only one making this decision. Keep your wits about you when it comes to undue pressure from property practitioners/sellers.
