Buying your first home is one of life’s most exciting experiences, with most buyers getting caught up in all the obvious activities such as selecting a location, inspecting housing stock, planning renovations and shopping for furnishings to suit their chosen property. With some basic knowledge of lending practices, they have also secured a mortgage and have moved into their first home.
What They Didn’t Know
A few years later, and with more information and experience behind them, many of these buyers would now admit that there were some crucial pieces of information that, had they known them at the time of purchase, would have changed the way they approached their quest.
A Mortgage is Just the Start
The first thing they would have done differently is to monitor their spending habits. Although they had saved a deposit, they underestimated their spending preferences. They were able to cover the mortgage, but other regular expenses attached to home ownership such as property rates, insurances, repairs and maintenance were a struggle until they controlled their spending. In hindsight, they should have created a realistic budget, which included the non-essential purchases that they had to forgo to achieve their home ownership dream.
Don’t Fritter Away Your Deposit
Some buyers underestimated additional costs at time of purchase that ate into the deposit they had saved. Fees and charges such as stamp duty, transfer fees, building and pest reports, conveyancing costs and solicitors’ fees can amount to thousands of dollars. The better alternative is to research these costs and save this additional money to maximise your deposit. If additional costs are chipping away away at your deposit, you need a good strategy for setting up a budget.
These are all issues that we are familiar with as property managers. Here at Bunbury Real Estate, we spend time with prospective buyers to find out the types of properties they would like us to show them. We also do our best to qualify each client to make sure that we are not wasting their time showing them properties that are out of their price range.
Pay Extra Each Month and Shorten the Loan
Many buyers wish they had understood more about the actual cost of the interest on their home loan at the start. Those who paid the minimum off their mortgage each month were not really getting ahead, while those who paid more than the minimum were reducing both the principal amount of the loan and the interest. This also shortens the term of the loan if the extra payments can be sustained over time.
Insure It Before You Own It
Finally, most first-home buyers did not know that they needed to insure the property they had under contract, even though they were weeks away from settlement. This was an unexpected up-front expense, but essential to protect their financial interest in the event that the property was damaged prior to finalising the sale.