Home buyers overlooking property problems

Home buyers overlooking property problems

Nearly one in four Australian home buyers has experienced buyer’s remorse after purchasing their property, with a significant percentage overlooking potentially expensive issues when inspecting their property, according to new research from ME Bank. 

Based on a representative survey of 1000 property owners in January 2018, 58% spent less than 60 minutes checking out the property before their purchase, and 26% discovered issues with their property after their purchase, including problems with paintwork, construction quality, gardens and fences, and fittings and chattels.

Some of the reasons these buyers gave for missing these issues during their initial inspection included:

  • Fell in love with the property and overlooked them (36%)
  • Lacked experience and skill in inspecting the property (32%)
  • Impatient and tired of looking (11%)

Also, approximately one third of those surveyed said they failed to arrange a professional building and pest inspection for the last property they purchased.

As a result of buying a property with problems:

  • 74% spent money fixing, replacing or improving the issues identified, or have plans to do so.
  • 41% would have paid less for the property had they discovered the problems earlier.
  • 23% experienced a degree of ‘buyers regret’ following the purchase.

However, it was found that the presence of post-purchase property problems isn’t always a dealbreaker for all home buyers:

  • 92% said it was still worth buying the property despite the problems they discovered.
  • 19% said they wouldn’t have purchased the property had they discovered the issues.
  • 14% said they plan to move sooner than originally planned now they’ve discovered them.

ME head of home loans, Patrick Nolan, said that it was important to thoroughly inspect a property before any purchase, and to beware the potential of emotions to cloud your judgment when buying a home:

“Spend more time inspecting the prospective property with several return visits at different times of the day.”

“See lots of properties so you can compare and contrast, give weight to any niggling hunches that give you cause for concern, and get a professional property inspector to do the checking for you.”

Top post-purchase problems identified among property owners:

Problem Total First home buyers Second or subsequent buyers
Paintwork 29% 30% 29%
Construction quality 26% 27% 24%
Gardens and fences 24% 26% 22%
Fittings and chattels 20% 19% 21%
Services (hot water, heating/cooling etc.) 16% 18% 14%
Neighbours 15% 14% 16%
Illegal building work 10% 9% 11%
Noise or lighting 10% 9% 11%
General floor plan  8% 8% 7%
Location 7% 8% 6%
Valuation 5% 5% 5%
Zoning or title 3% 4% 2%

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How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

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What is a line of credit?

A line of credit, also known as a home equity loan, is a type of mortgage that allows you to borrow money using the equity in your property.

Equity is the value of your property, less any outstanding debt against it. For example, if you have a $500,000 property and a $300,000 mortgage against the property, then you have $200,000 equity. This is the portion of the property that you actually own.

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Usually, these loans have higher interest rates and a shorter repayment duration.

What is equity and home equity?

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It is calculated by the state government based on the selling price of the property. These charges may differ for first homebuyers. You can calculate the stamp duty for your property using our stamp duty calculator.

What is equity? How can I use equity in my home loan?

Equity refers to the difference between what your property is worth and how much you owe on it. Essentially, it is the amount you have repaid on your home loan to date, although if your property has gone up in value it can sometimes be a lot more.

You can use the equity in your home loan to finance renovations on your existing property or as a deposit on an investment property. It can also be accessed for other investment opportunities or smaller purchases, such as a car or holiday, using a redraw facility.

Once you are over 65 you can even use the equity in your home loan as a source of income by taking out a reverse mortgage. This will let you access the equity in your loan in the form of regular payments which will be paid back to the bank following your death by selling your property. But like all financial products, it’s best to seek professional advice before you sign on the dotted line.

What is an investment loan?

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How much is the first home buyer's grant?

The first home buyer grant amount will vary depending on what state you’re in and the value of the property that you are purchasing. In general, they start around $10,000 but it is advisable to check your eligibility for the grant as well as how much you are entitled to with your state or territory’s revenue office.

How much deposit do I need for a home loan from NAB?

The right deposit size to get a home loan with an Australian lender will depend on the lender’s eligibility criteria and the value of your property.

Generally, lenders look favourably on applicants who save up a 20 per cent deposit for their property This also means applicants do not have to pay Lenders Mortgage Insurance (LMI). However, you may still be able to obtain a mortgage with a 10 - 15 per cent deposit.  

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