HOMEBUYER MISTAKES you can avoid

HERE’S EVERYTHING YOU NEED TO KNOW

As someone who bought his first home at the age of 18 (with a questionable home loan and very little deposit),

I had a youthful sense of enthusiasm that I was doing the right thing. It helped that I had already spent 12 months in a property environment, so I was aware of what I was doing – but for those who aren’t, what should you beware of ?

WATCH OUT FOR HIDDEN COSTS

When it comes to extra costs, stamp duty is often the most crippling additional charge that people forget to factor in. If you have less than a 20 per cent deposit, you should also watch out for LMI (lenders mortgage insurance), which can be in the thousands.

Given the situation right now, allow room for higher interest rates than the rate that is currently being quoted. Building insurance, council rates and water charges may also crop up during the buying process or just after you settle. Also take into account legal costs and ‘search’ charges, as well as building and pest inspections

HAVE A PLAN B

For peace of mind, research the rental value of the property. You should also consider, if you can, overpaying the amount that you owe on your home loan on a weekly basis. This will help you to avoid a worstcase scenario if your financial circumstances change and the value of your home has become static or dropped. Having a plan B means that you won’t have to panic sell and if things go wrong, you have the option of approaching your lender or renting the home.

DO YOUR DUE DILIGENCE

If purchasing under auction terms, this must be undertaken before auction day. If not, you have a time period which can be set during negotiations when your offer is accepted (typically 14 or 21 days).

What this means is doing your research and asking the right questions. Can you get the home loan you want? Are the contract terms fair? Is the property as you expected, both in its condition and value? Are there neighbour disputes, boundary issues or easements? If you are planning changes, will those plans be

permissible?

Consult with professionals such as lawyers, building inspectors and your local council, and ensure you know the area and the street.

DON’T BE SCARED

For many, buying a home is about a ‘feeling’. Don’t be nervous – just follow your dreams, providing that you’ve done your due diligence. What if something is wrong? Maybe termites are a problem, or you discover the price is much more than it should be.

If you still love the home, negotiate! Negotiations work best with explanation, so if there are unexpected essential repairs, get these costed and use them to negotiate.

One final note – the wonderful thing with real estate is that in most cases if not all, values that go down eventually go back up. Ensure you can be in a position to hold onto your home until the market recovers.