How to avoid biggest first-home buyer mistakes

Buying a first home is stressful because you have never done it before. So here are some of the most common mistakes you can make. Read more in our First Home Buyers Bible.

First home buyers make many common mistakes. Picture: iStock.

• Read the First Home Buyers Bible

Buying your first home is a big deal, but chances are you have little to no experience
in the world of real estate. Canstar and First Home Buyers Australia have highlighted some of the biggest rookie real estate mistakes.

1. Not being budget-savvy

Don’t start looking online before you know how much you have to play with. Use an online home loan borrowing calculator, or speak with a lender or mortgage broker to understand what the banks will be willing to lend you.

2. Not having that 20 per cent deposit

There are ways to get into your first home without the standard 20 per cent deposit, but anything less can be costly with Lenders Mortgage Insurance (aka LMI), which can add up to thousands of dollars.

Georgina Auton and Jordan McNee are looking for their first home. Picture Claudia Baxter

3. Not getting the reality of rates

Rates may be at historic lows, but what goes down must go up. A new buyer will likely be in a home loan for up to 30 years so it’s worth pointing out that interest rates were more than double their current status just 10 years ago.

4. Missing out on grants

The First Home Owners Grant differs across the country, but is mostly for first-timers buying or building a new house or unit. In some places it can be used for established homes. Visit http://www.firsthome.gov.au

5. Not having enough left over First-home buyers need to also consider the hefty costs of stamp duty, building inspection or strata reports, transfer fees, solicitor fees, moving costs, new furniture or renovations.

What you need to know as a first home buyer.

MORE:

THE TOP SYDNEY SUBURBS FOR FIRST-HOME BUYERS

TOP INNER AND MIDDLE SUBURBS FOR FIRST-HOME BUYERS

6. Falling for the frills

First-home buyers just need to remember not to get too emotionally attached to a property because of the furniture or styling — and the same goes for house and land packages or off-the-plan apartments. Read the fine print and ask lots of questions of the builder or developer.

7. Not negotiating

Not everyone is a born negotiator, but there’s no time like the present to learn some barter banter. That power of negotiation also works when haggling for a home loan.

NEWBIES READY FOR THE NEXT MOVE

By Sophie Elsworth

Hasty first-home buyers are already considering selling their initial property purchase within five years of signing the dotted line.

For many entry-level buyers getting into the market is challenging enough — but this is not enough to deter them from already thinking of their next purchase.

In the new Genworth First Home Buyer Sentiment Report, released today, of the 2000 prospective first-home buyers surveyed, it found one in three plan to sell within just five years.

Genworth CEO Georgette Nicholas said many new buyers have chosen to enter the market as investors. Picture: James Croucher

Genworth Australia’s chief executive officer Georgette Nicholas said in recent years many new buyers had chosen to enter the market as investors.

“A lot of them did get into the property market as an investor, there’s a tax incentive,” she said. “But a first-home buyer going into an investment property needs to really understand what they are getting into longer term, the financial aspects of an investment property and not necessarily just to being in it to flip it.”

What you need to know as a first home buyer.

The preparedness of prospective
first-home buyers to upgrade properties coincides with a growing trend of first-timers being comfortable with buying an entry-level property or an investment property as a starting point. This is often a unit or apartment purchase before progressing to a home down the track.

The report found of recent first-home buyers 15 per cent planned to own their property for less than five years.

Another 32 per cent said they thought they would own their starter property between five and 10 years.

Originally published as How to avoid biggest first-home buyer mistakes