News & Info
Buying a house is definitely one of the highlights in life; however, buying a house for the first time can be as confusing and overwhelming as it is exciting. There’s loads of information out there, and depending on the source, you can easily be lead down the wrong path. But never fear, first-time homebuyers, as we’ve comprised a comprehensive list of everything you should know about buying a house. Here’s our top 7 tips to help you through the process.
1. Know your budget
Rule number one: determine your budget and stick to it. Knowing what you can afford is crucial when searching for a property. You’ll need to factor in additional costs such as insurance premiums, property taxes, homeowner’s insurance etc. It’s not realistic to look at homes in the $600k plus range, if mid $400k is the best you can do as an entry-level homeowner. Getting started is always the hardest, but don’t worry, there’s still plenty of time to get the dream home.
Here’s something to consider: owning an investment property can be up to 40% cheaper than living in your own home. This financial incentive is because all costs become tax deductable, therefore allowing you to live in the location you want, while still giving you a way into the property market. There are a lot of factors to consider before committing yourself to an investment property, so make sure you do your research.
3. Share a house
It’s no secret that property affordability is a real issue for many of us. If financial constraints are holding you back from your dream home, consider buying a house with a sibling, friend or investor to help share the costs. Pooling your resources can be a great way to buy a better property in good area, instead of settling for something cheaper in a dodgy neighbourhood.
4. Avoid a grant if possible
Here’s the thing: most grants and first homebuyer’s schemes are a bit of a trap. This is why: the government is offering $20k to first homebuyers, however, it only applies to brand new properties. Once that property depreciates you could lose up to $50k in value on your purchase. Can you see where this is going? Straight away you’ll be set back $30k, which could easily be a deposit on another property. Be smart.
5. Fear of missing out (FOMO)
Property FOMO is real – and agents know it. Sadly, being a rookie to the process of buying a house makes you more vulnerable to falling victim to FOMO. There’s lots of reasons why the fear of missing out can lead you to make poor decisions. These include being too exuberant or naïve with negotiations, being fed up with looking, or getting sucked into what everyone else is doing. It’s important to understand that the property market is cyclic, so give it the time it needs to avoid making expensive mistakes that may take years to recover from.
6. Think long term
Home renovation shows on TV have got everyone thinking they can be overnight millionaires with the right handy-work. However, it’s a lot more complex than that. A simple, safe way to get into the property market is to ask yourself if you’d still like to own the property in 20 years. If not, walk away. The entry and exit costs of buying and selling a house are steep, and mistakes can cost you dearly. If you’re looking for your money back in under five years, you’re probably going to be disappointed.
7. Wait on any large credit purchases
As a first-time homebuyer, your credit rating has the potential to make or break your eligibility for a loan. Big ticket items, like a lease or car loan, can hugely impact your debt-to-income ratio, meaning lenders won’t be willing to help you out. If you can, hold off and wait to make any large purchases with credit. That rust-bucket may not look the part in your driveway, but at least it will be your driveway.
And finally, a little bit of parting advice: get educated. Knowledge is by far the most valuable tool to navigate your way through the property market. The more research you do, the better chance you have of making an informed decision that best suits your wants, needs and lifestyle.