I remember when we bought our first home all those years ago. It was an exciting time because it represented the beginning of our future and it was fun exploring and comparing various homes and suburbs.
But I also remember that it was somewhat daunting because it represented a big commitment for us, both emotionally and financially, not to mention that we’d never done it before and were worried we might make a big (and costly) mistake.
We made some mistakes but learned a lot along the way. To help ensure you don’t make the same mistakes we did, here is the first half of my top ten tips that will help make your first home-buying journey a happy and successful one:
1. Make sure you’re ready for home ownership.
Above all else you must be sure you’re ready for the commitments home ownership brings and you must be certain that buying your first home is right for you.
Don’t be seduced into thinking you must own a home just because of what the so called property experts and marketers tell you. Remember that while home ownership is the great Australian dream it’s not everyone’s dream. So think carefully and only buy when you’re able and ready to do so.
2. Work out your budget
At the outset you need to set yourself a realistic target based on what you can afford. It’s no good looking at properties in suburbs that are outside your price range. This only leads to heartache, disappointment and is a waste of time. Use the formula below to help narrow down where and what you can afford to buy:
Spending power = borrowing power + deposit – home acquisition costs + government grants and concessions
3. Select your home loan carefully
Your home loan is going to be with you most of your working life so choose it wisely. Make sure it has the necessary features that meet your needs now and into the future, especially if you’re thinking of starting a family within the next five years. And remember that the lowest interest rate doesn’t necessarily make for the best product.
Try and do as much of your own research as possible and seek professional help if you get stuck, or talk to family and friends who have been through the home buying process before. And never borrow more than you can afford.
4. Partner with the right lender
You and your lender are going to have a relationship for some time so make sure you only deal with someone you trust and who understands you.
It’s important that you research the market (including brokers if you choose to use one) so you can be assured of their reputation, skills, knowledge, product range and service standards. Never be afraid to ask questions and if you don’t get a reasonable or timely response you should look elsewhere.
5. Perfect properties don’t exist
We all want the perfect home, especially our first one, but the reality is they are rare to come by. So it’s important to be realistic and make compromises. The right location is first and foremost the most important thing to get right.
You can always change a property’s appearance but you can’t change its location. So scale down your expectations and decide what’s really important to have and what’s not. And always remember it’s the selling agent’s job to talk up a property and its location, so check everything you read and hear.
Read the second half of this column - Top tips for first time home buyers - Part 2
Peter Boehm's book The Great Australian Dream: A Guide to Buying Your First Home is available online and at all good bookstores. It’s an easy to read and comprehensive how-to guide that will help you successfully navigate the numerous challenges everyone faces when entering the property market as an owner occupier or investor. It is also available as an iBook