It’s the biggest purchase most of us are ever likely to make, so any mistakes we make in the process of buying a home are likely to be costly – financially and emotionally.
Not surprisingly, for such a sizeable purchase with numerous factors at play, there are many things that can go wrong. But as with anything, you can avoid common mistakes by being informed and prepared for all eventualities. Here are three of the worst mistakes you can make when buying a home and ways to avoid them.
Eyes bigger than your wallet
Borrowing more than you can afford is the most costly mistake you can make on your quest to become a homeowner.
You can avoid this pitfall by doing your sums before you start searching for a home rather than falling in love with a home, making a hasty offer and committing to a mortgage you can’t afford. This is not a time to be impulsive.
Try using a home loans calculator to work out how much you can afford to borrow, and it’s a good idea to talk to lenders and gain pre-approval for a home loan before you commence your house hunt. This way, you are more likely to stick to what you can afford.
As a guide, your mortgage repayments should not be more than 40 percent of your gross income if you are a two-income household, and less than 35 percent for single people on one income.
When you are buying your own home rather than an investment property, it’s easy to allow your emotions to get involved – but you shouldn’t.
Falling in love with a home can be a dangerous mistake. You are more likely to overlook any shortcomings, such as the home being too large for your needs or too old and in need of costly maintenance. And you are more likely to end up paying more than the property is worth, out of fear of losing it.
Underestimating the cost
When the numbers are so big, it’s easy to forget about a few thousand dollars here or there.
Once again, the key to avoiding this mistake is doing your homework to factor in all costs associated with buying a home: legal fees, loan application fees, the correct stamp duties, building inspection fees, council rates and mortgage insurance, among others.
Falling short at the start of your home-ownership journey can put you on the back foot financially, and cause a high degree of stress.
Doing your homework can save you money and deliver peace of mind.