Home Buyer's Check List
Summary: Here’s a checklist to help avoid mistakes when buying a property.
We don't want you to make a mistake during one of the biggest purchases of your life so here's a checklist to help you avoid making a mistake.
Do Your Research
If you've found the area / neighbourhood that you like, it's time to get to know it better. You want to be confident about your choice as you are about to take out a large loan to buy there. Take a look around the surrounding neighbourhoods, the streets, the schools, the parks, the public spaces, the shops, the car parks, and the types of businesses and their clientele. You want to know everything up front as this will be part of the pricing of your property.
For long-term happiness, make sure you factor in the commute and have thought about your travel to and from work on a daily basis. You can even visit the neighbourhood in peak hour to get a feel for what it is like.
You should also know something about the houses in the area and the price trends that the residents are seeing. Go to some other auctions or property inspections for properties that are both above and below your price target to get a feel for where the market is heading and the types of residents in your new area.
If you don't do the research, you might be shocked when you do actually move into the property and it is different to your expectations (and your sense of valuations).
Understand the Full Cost & Budget
For some of us, budgeting can be a boring thing to do when there are far more exciting things (like the auction) to think about. However, the wise thing to do is to create a very detailed list of all the expenses you are going to incur when you buy a house. If you don't, you are sure to miss something and you might get a rude shock, especially if that coincides with an interest rate rise or other financial event. Here are some key things to budget for:
Mortgage insurance, Stamp Duty, Valuation fees, Loan Application fees, Legal fees, Moving costs, Government fees, Building Inspections, Pest Inspections, Rates, and utilities.
If you're not realistic in your budget, you are bound to be over-stretched at some point in the first year of your home loan.
Keep Your Emotions in Check
Buying a property can be a very emotional process, however you do need to keep in mind that you are making a serious financial decision. Remember, your emotions will fade over time but your mortgage will always be there to remind you of your decision, and it fades at a far slower rate.
Emotions are great and you should enjoy them (they're the fun part of buying a property), just keep them in check and don't let them take over. It is a business and a personal transaction and it should be treated in that order.
The experienced property veterans will say that over-stretching your budget for a property that you are emotionally connected to is never a good idea. Many people even use someone else bid for them at auctions with instructions to stay within budget limits so that emotions don't get in the way.
If you fall too far in love with a property, you might be unable to see the serious financial implications of the transaction.
Choose Loans Wisely
Learn about the different mortgage types that are available and which loan type is going to suit you best. We help you compare the different loans in the market and their overall costs for your desired loan amount here on WhistleOut. Be sure to allow for interest rate changes, especially with introductory rate or variable rate home loans.
Locking into a loan which is expensive to leave. Remember to think about your exit points (most home loans only last 4-7 years due to some sort of re-financing) so don't lock into a 15 year fixed rate if you are thinking of re-financing in 4 years.
Review the Property, Properly...
You can fall in love with a property very quickly. You can even fall in love over the internet looking at your new house on a real estate site before you even turn up for an open house inspection.
However, to make a good decision you will need to consider everything about the property you are buying.
Go and inspect the property on several occasions formally and informally at different times of the day, including on a weekend, and on a week night. Think about parking, noise, aircraft, neighbours, trees, dogs, floods and any planned council developments and building projects.
Look for anything that is going to need to be repaired as you'll need to budget for that.
If you let your love for a property cloud your analysis, you might not see what others see and that is going to cost you.
Formal Property Inspections
The property looks sound and solid so do you still need an expensive building inspection? The answers is, Yes.
An independent property inspection will reveal hidden future costs and reveal the full state of the building.
It is advisable to have both a building and separate pest inspection carried out. A building inspection might, for example, highlight prior termite activity at the property but won't advise whether termites continue to be present.
If you are purchasing a strata property it is advisable to carry out a strata search where a consultant will examine and assess the interior and immediate exterior of the unit you are considering buying and also look at the records of the strata scheme.
Take your time. View as many properties as you can to provide good comparisons within your price range. Don't despair if you lose out on a property. Don't be too slow as you will need to move fairly quickly when you find the right house for you, however it is important not to rush and make mistakes.
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