Listen up rookie, you’ve got some learning to do.
1. Poor account conduct
This is when being silly or forgetful with your money can come back to haunt you. Your home loan won’t be fully approved until the bank has seen your bank statements. Dishonoured direct debits or going into unarranged overdraft can make you look like a risky prospect and you could be declined.
2. Looking in all the wrong places
A number of first home buyers start their hunt looking at properties (and going to auctions) well above what they can afford. Eventually they get buyer fatigue and end up buying the first thing they can, which is never a great way of approaching it.
3. Putting offers on the wrong houses
If a place seems too good to be true, it usually is. Do some basic checks yourself before getting an inspection – look under the floor for dampness or rot and look for repairs.
4. Check everything works
A building inspection will throw up structural issues with a house but will miss the small stuff. It pays to check that everything works – heated towel rails, spa pool, dishwasher, dryer, drains, electric door to hidden lair, hot water, central heating, fans, and oven.
5. Not allowing for upfront costs
You will have between $1,500 and $3,000 of upfront costs when buying property. Make sure you factor this in to your budget.
6. Under estimating borrowing costs
Banks will approve you for more than you can reasonably afford. It is important to have a realistic budget and to plan on higher interest rates. Putting your head in the sand simply creates problems later.
7. Changes in circumstance
If you are going to have kids, travel overseas, go back to study, or join a hippie commune – work out what that means in advance. If you need insurance, we can help with that.
8. Paying the minimum
If you only pay the minimum you will not get ahead and your mortgage costs will increase when rates go up.
9. Choosing the lowest rate
The lowest rate is often not the cheapest option – they can often come with hooks and hidden costs.
10. Buying “interest free” stuff for the house
Once you have a mortgage it gets harder to repay other debts. Although a hire purchase might be interest-free (and you might absolutely need it for your kitchen) at some point it needs to be repaid and will then impact on how easy it is to live with your mortgage.