10 Things First Home Buyers Wish They Knew Before Buying Their First Property
Buying your first property is a daunting task, especially if you have no idea what you’re actually doing. And let’s face it, that’s most of us.
There’s a lot to think about and organise – whether that’s getting your finances in order, property market research, attending open homes or negotiating deals, there’s so much to consider before you’re handed the keys.
So, to help, we’ve pulled together a handy checklist of everything you need to know – and avoid – before you dive head first into property ownership. Because the best way to learn is through your mistakes, right? And believe us, we’ve experienced a few!
These are the top ten common things first home buyers wish they knew before buying their first home. This will take you through to property greatness.
Curb Your Spending Habits
Uber trips. Online shopping. Wining and dining. Whatever your vice, there are areas in your life where you need to kick the spending habit. Being honest with yourself and confessing your spending sins is the first step to financial freedom... and preparing yourself for a mortgage.
Short term pain for long term gain, here’s an easy way to get started:
Rip off the band-aid and spend a week tracking your day-to-day spending
Everything from groceries to late-night ASOS binges – don't miss a thing! Although tough, it will help you determine how high you're willing to let your mortgage repayments be.
Once you have a good understanding of how much your lifestyle is costing you, categorise your expenses
Flag what are necessities (rent, food, bills) and what are extras (subscriptions, a new outfit, spa treatments) as you may need to forgo some of the extra expenses to help with budgeting.
Decision: Rentvestor or Owner-occupier?
You may have been told since you were young that you need to invest in property... but did you ever ask why? Apart from the obvious investment and future-proofing reasons, did you imagine that your first-home would be for you to live in or a source of income?
Depending on what you decide to do, this will impact your home-buying process, from loans and interest rates, to government support and tax.
To help you make the decision, let us introduce you to the Rentvestor and Owner-occupier:
Your traditional first-home buyer who will live in the property that they purchase.
A buyer that will purchase a property and rent it out, while living and renting a different home.
Important things to consider:
- Loan types: Yes there are a few different types, and you will need to make sure you are selecting the right one.
- Interest rates: Depending on your decision, this can affect the interest rates available to you.
- Government grants and stamp duty: Read up on what you are entitled to from the government.
- Tax: Understand what home ownership will mean for your taxable income now that you will have an asset.
- Type of property: You may be looking for a studio, but the current rental market is brimming with renters looking for two-bedroom apartments. Think about what the potential tenants will need if you decide to rent out the property versus what you would need to live comfortably, as this may change what you’ll want to buy.
Property Finance 101
If you’re the kind of person that likes to leap into the unknown – listen up. When it comes to buying a home, you have lots of things to consider in terms of finances...
- Saving for a deposit
- Getting approved for a loan
- Stamp duty
- Inspection reports
- Moving quotes
When you’re talking tens of thousands of dollars, this isn’t something to run blindly into. Do yourself – and your sanity – a favour and arm yourself with as much knowledge as you can about property finance. Seek advice from home owner friends and finance specialists, and above all- plan for the unexpected. Once you know the difference between your torrens and strata titles, then start thinking about your next property move.
Don't Settle for any Mortgage Lender
In the rush to get their hands on a property quickly, prospective buyers fall into the trap of locking in finance with the first mortgage lender they meet. Although it is very important to know where you stand financially from the get-go, you still want to make sure that you shop around for the best advice and deals.
Mortgage research plan of attack:
- Do your research by speaking to the banks and mortgage brokers directly
- Review the offering – from fees to the fine print
- Compare all your options
- If three months have passed since you were pre-approved, check in with your lender to make sure nothing has changed in terms of how much you can borrow
- Most importantly: always be on the lookout for better deals
Buyer’s Agents Aren't Just For the Cashed Up
Thought to be just for high-end property moguls, buyer's agents are an invaluable and accessible resource for buyers at all life stages. Providing you with an end-to-end service, a buyer's agent can take all the added stress and uncertainty that comes with negotiating, bidding and closing the deal. Another advantage of a buyer's agent is that they have in-depth knowledge of the property market and provide buyers with unprecedented access, from off-market properties and exclusive opportunities.
Your First Bid or Offer Won't Neccessarily Be Successful
Buying a home is an emotionally driven process, where feelings of excitement can quickly turn into disappointment. Before you get ahead of yourself and start mentally planning colour schemes and furniture styles in your dream home, safeguard yourself by keeping an open mind and remembering the following tips:
- The market is highly competitive, and odds are that you won't secure the first property you see.
- Set yourself realistic boundaries (i.e. budgets, timelines) to keep yourself in check.
- Whether it's a partner, friend or family member, don't go it alone – it’s always good to have someone you trust to float ideas with.
- And remember... there is always new stock coming onto the market. If you miss one, there will be five others that will pique your interest.
When you start searching for a property, your wishlist checklist becomes your bible. But once you embark on your home buying journey and start going to inspections, you’ll quickly realise what’s realistically within your budget and what you need to compromise on. This is completely normal. You’ll most likely change your mind multiple times. To help keep you on track:
- From the get-go, it’s important to know what your non-negotiables are – the number of bedrooms and bathrooms, accessibility, parking, yard size etc.
- Don't sweat the small stuff. Things like wall colours can be easily fixed. Focus on the floor plan and wet areas (i.e. kitchen and bathrooms), as these will cost a lot to alter.
- Consider your lifestyle: keep your current and future lifestyle needs in mind when comparing potential homes.
Non-negotiables: Building & Pest Inspections
Regardless of how much you want the property or how good it looks on the surface, don't skim over completing due-diligence on the property. Building and pest inspection are crucial to understanding everything from structure, drainage and plumbing, to potential termite and roof issues – all things you need to know before submitting your offer.
Things to remember:
- Every building and pest inspection will find problems.
- See the minor issues as leverage for when it comes time to negotiate.
- Focus on the significant issues as they can be costly and time-consuming to fix.
- You will also likely be forking out money for a few building and pest inspections throughout your home buying journey.
- Always work with experienced professionals who have your best interest at heart, not the vendors.
Wheeling & Dealing
Negotiation is key when it comes to buying and selling real estate. Although the most significant part of the negotiation phase is the final selling price, get your game face on early and start negotiations from the first inspection.
Everything is open to negotiation
From the final sale price to the settlement period, to the home’s fixtures and fittings, everything is up for negotiation.
Don’t be afraid to ask questions
Ask questions about what is and isn’t included, why the owners are selling, how long the property has been on the market etc. Find out as much as you can and use that information to your advantage.
I don't know how to negotiate
If you’re not confident in negotiating, get someone who is and who can separate the emotion, whether that’s a family member, a trusted friend or a buyer’s agent.
Patience is Key
There is no hard and fast timeline to tell you how long it will take to buy a property. From weeks to months, the journey is different for everyone.
- Take the time you need to find the right property – don't rush the process.
- Know what your needs and budgets are.
- Be flexible in your search.
- Be prepared and ready to act quickly for when the right property does come along.
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