Purchasing your first property is a milestone for sure, and one that signifies getting your foot on that first rung of the property ladder that will hopefully culminate with a secure retirement. There are many pitfalls, however, and if you are about to experience the complex world of real estate, here are some things to avoid.
- Credit Rating – It is no use just assuming that you will be able to secure a mortgage, and the fact that you have never had anything on finance is no guarantee that you will be accepted. In Australia, you can buy your credit report, and with almost 10% of the adult population unable to receive credit for one reason or another, it does make sense to tick this one off the list.
- The Wrong Builder – This can be the stuff of nightmares and the best way to avoid the many problems that would occur if you bought from a cowboy, is to only deal with a large, established local company, and preferably with several large, ongoing projects and a good selection of show homes.
- Overstretch the Budget – This happens quite often and is usually caused by a failure to plan finances, which can be made all the more likely by a desire to own your own home, at any cost! Your mortgage provider would have to be satisfied that your income is sufficient to repay the loan, and even when it is, there are many unseen expenses that could soon change things for the worse.
- The Wrong Location – Sometimes, we see a particular housing development, fall in love with the show home, and after a scenic drive around the complex, we sign on the dotted line. It is only later that we realise there are no schools nearby and the shopping isn’t what you’d expect, so make sure you factor everything in, before deciding on your first home location.
- Avoid Additional Credit – For at least 6 months prior to applying for a mortgage, it isn’t a good idea to buy anything on finance, as this will be discovered during a credit check, and if the lender feels you already heavily committed, your chances of approval will be low.
- Emotional Issues – Our emotions very much define who we are, and while they are a part of our make up, they have no place when buying real estate. The new home might seem lovely and you will have mental images of lounging by the pool, and have already decided on the furniture, but all these feelings tend to cloud our judgement, and in the cold light of day, buying a house is a very big investment, and possibly the largest you will ever make.
Many young people are terrified of the process of house buying, but if you approach it with a logical mind and take things step by step, it can be a very rewarding experience and one that will herald the start of a long and beneficial life as a landowner.