Buying your first home is a big step. Being such a complicated process, it’s not uncommon for first-time home-buyers to overlook things and make costly mistakes. Here are just several expensive blunders to avoid.
Not shopping around for mortgages
Many first-time homebuyers spend a lot of time shopping around for property, but very little time shopping around for mortgages. In fact, some homebuyers may settle for whatever their bank offers, without comparing other lenders. This could result in you paying much more in debt than you need to.
In many cases, you’re much better off using a broker than a bank. Why use a mortgage broker vs a bank? Brokers compare multiple mortgages for you and can give you expert advice helping you to understand complex terms and work within your budget. They may even have access to exclusive deals that you can’t find on the market due to having close relationships with lenders. Some mortgage lenders will charge a small fee for their services, but generally you’ll still save a lot of money by using them.
Only budgeting for the down payment
When saving up to buy a property, most people focus all their energy on being able to afford the down payment – this is the most expensive upfront cost. However, there are many other upfront costs that need to be budgeted for too such as conveyancer fees, surveyor fees, van hire/removals hire and first month’s mortgage payment. These extras can cost thousands altogether.
On top of budgeting for these upfront costs, it’s important to also not ignore your monthly mortgage fees – there’s no use taking out a mortgage with an affordable down payment if you can’t realistically afford the payments each month. Bills, home repairs and taxes are just a few other monthly expenses you’ll have to budget for too.
Failing to hire a surveyor
A property surveyor is always worth hiring because you commit to making a purchase on a property. Surveyors check the property for any hidden problems that could be costly in the long run such as signs of structural damage or subsidence. They can give you an idea of how much money you may need to put into repairs and whether it’s worth your while. Surveyors may charge few hundred dollars, but hiring them could save you thousands in many cases. It’s best shopping around to find a surveyor within your budget who also has a good reputation.
Allowing yourself to get rushed into a purchase
Buying a property is not a process that you want to rush – it could be the most expensive thing you buy in your life time. A lot of people within the trade may try to rush you into making decisions. Agents for example may often try to push buyers into a purchase by claiming lots of other people have viewed the property, whilst mortgage lenders may try to push you into taking out a loan from them there and then. It’s important to not let them pressure you into making a purchase until you feel confident that this is the right option for you. Of course, you don’t want to spend too long deciding whether to make a purchase on a property, otherwise it could get snatched up by someone else, however you shouldn’t ever make a decision there and then – give yourself enough time to compare multiple properties/mortgages and mull over the pros and cons of each one.
Not considering the future
Your future circumstances could change in which the case the perfect property for you now may not be the perfect property for you in a couple years. For example, if you’re a couple, consider whether you’re planning to have kids and whether the home has enough space. Also consider whether you’re likely to change job soon and whether this may affect your commute or your income.
It’s important to also consider what you may be able to do with a property in the future in terms of renovations. You may find a property that’s got a few imperfections, but it could be under your budget allowing you to make future improvements and fix up the property to your specs. You may be able to knock down interior walls or replace an ugly bathtub or change the layout of a kitchen – the beauty of buying versus renting is the fact that you can make these modifications.