10 of the worst mistakes first home buyers make and how to avoid them

Buying your first home will probably be the biggest financial decision you have ever made. Before you go raising your hand at an auction, you need to come up with a smart plan to make sure your choice is the right one.

To help set you on the right track, we’ve put together a guide to 10 of the worst first home buyer mistakes and how you can avoid them.

1. Overextending your finances

If buying a certain home and servicing the mortgage is going to uncomfortably stretch your finances, it’s not the right place for you. It’s always best not to completely empty your savings so that you have a cash buffer in case unexpected costs like repairs and maintenance come up.

2. Not doing the research

When you bought your last phone, you did a bit of research, right? That phone probably cost around $1,000 and the home you’re about to buy is likely to cost at least 500 times that. You need to thoroughly research the market in the area you’re buying and understand the true value of the home you’re considering.

3. Forgetting about the extra costs

Buying a home costs much more than the purchase price. There are conveyancing fees, mortgage fees, stamp duty, inspection costs, repairs and maintenance, moving costs and so many more costs that could arise. Make sure you have enough left in the budget to cover all the extras before you commit.

4. Not getting your home loan pre-approved

Home loan pre-approval is an indication from your lender that, if they’re happy with the property you buy and nothing changes in the meantime, they’ll lend you a certain amount of money. Bidding at auction or making an offer on a property without pre-approval is a shortcut to disaster – one outcome being that if your offer is successful and the bank doesn’t approve your loan, you could lose your entire deposit.

5. Missing out on first home buyer grants and stamp duty exemption

First home buyers may be eligible for grants of up to $15,000 as well as stamp duty concessions. Before you start looking for houses, make sure you’ve checked your eligibility and applied so that you don’t miss out on what is essentially free money.

6. Not shopping around for a loan

Don’t go straight to your usual bank and sign up for a loan – make sure you’re getting the best deal possible by shopping around. Speak to a couple of mortgage brokers, as they may be able to secure you a better rate and offer more personalised advice. Read online reviews and do your research before choosing your lender.

7. Forgetting your ‘must-haves’

Before you start house hunting, you need a list of non-negotiables, that is, the home features you won’t compromise on. These might include: at least three bedrooms if you’re starting a family or a big backyard if you’ve got pets. No matter how fantastic a home may be, if it doesn’t have the essentials, don’t buy it.

8. Not playing the long game

Don’t settle for a place that’s easy right now. Try and buy something that’ll set you up for the future. Whether that’s a home that your family can grow into, or a fixer-upper that’ll set you up financially, you should always pick the better long-term option.

9. Skipping the building inspection

Few parts of the home buying process are more important than the building inspection, particularly if you’re buying an older property. An inspection from a reputable builder usually costs less than $500 but it could save you thousands.

10. Skim Reading the paperwork

When you buy your first home, understanding the sale and purchase contract and land title is absolutely essential. Unless you’re experienced with documents like these, it’s always best to hire a specialist property lawyer to check the details and explain them to you.

Buying your first home is a massive decision. Take your time and learn from those who’ve already made these mistakes to make sure you get it right.