Buying your first home is a hugely exciting time in one's life. While you are securing your own slice of New Zealand and an asset that will only increase in value, at the same time, it is also the biggest debt many of us will ever take on.
As a result, purchasing your first home should not be an impulse decision. In order to put yourself in the best position to succeed and benefit from this life-changing purchase make sure you do everything you can to avoid these common mistakes.
Miscalculating the total cost
Buying a house is not cheap. And, in today’s market, median house prices are continuing to trend upwards. While everyone is aware of this trend, what many first-time buyers don’t account for is the additional costs associated with purchasing a house.
Just because you have saved up for a deposit and you have pre-approval for a certain amount, don’t think that everything is covered. Because the reality is that there are many other costs associated with buying a house. On top of the deposit, there are the costs of inspections and documentation, Lenders Mortgage Insurance (LMI) and lawyer fees that all need to be budgeted for.
Additionally, if you are seriously interested in several houses, it is wise to get documentation and inspections for each house. So, make sure you factor all of these costs in when you are designing your budget.
Reaching too far
Jumping into the property game is going to have its ups and downs, but overall, it should be a fairly happy process, not one that is going to leave you with regret and anxiety. Unfortunately, far too many first-time buyers find themselves in this position because they over-extend themselves.
The best way to avoid this situation is to create a realistic budget and stick to it. Before you get serious about the process or property, make sure you have a firm understanding of your financial position. Take the time to understand where your household income goes, track every outgoing expense, include everything from your daily flat white through to your car repayments.
Once you start bidding on houses, make sure you stay within your limits, never offer more than you have budgeted for. While you may feel the repayments are manageable, you never know what is around the corner and how that might jeopardize your repayments.
Not looking for a helping hand
In New Zealand, first-time buyers have access to a number of amazing governmental schemes that are aimed at helping buyers get their foot in the door. Make sure you investigate every option to see which is the best for your situation.
With schemes that include KiwiSaver, KiwiBuild and KiwiSaver HomeStart grant, to name a few, there are a number of options. If you are unsure of how these schemes work or would like to investigate them further, we can help you make sense of them and see which is best for you.
Only focusing on the house
When you are looking at houses, remember that it is not the only thing you should be looking at. While many buyers get caught up in their visions for how they’ll design their living space or what renovations are possible, also think outside the box.
Remember you are buying into an area, not just a house. So, consider the council and what the local community has to offer. Are there good schools, restaurants and activities in the area? What are the transport routes like and do they fit your needs? How has the local property market been trending recently and what is forecasted?
All of these elements should be included in your decision-making process, as they will greatly affect the attractiveness of the house.
Not being fully prepared
If you are considering making an offer, make sure you have a complete picture of what potentially could be yours. We have all heard the horror stories of someone buying a house, only to find out that the roof is leaking or you can’t repaint the house due to clauses within your cross lease.
By getting everything from building reports, LIMs, property evaluations or body corporate files, you will have a clear picture of what you will be getting when the keys are handed over.
Additionally, by being armed with all the information, you will potentially be able to negotiate the price down if there are any issues.
There are a number of mistakes that tend to trip first-time home buyers up as they progress through their journey to buy a first home. The key to not making these mistakes is to make sure you are fully armed with all the information out there and you have a clear plan of attack.
Before you get too far down this road, make sure you speak to one of our friendly and experienced advisers. We are on hand to make sure you get your dream first house without experiencing any of these mistakes.