In this article we consider 10 Mistakes First Home Buyers Make when purchasing their first home. At Brisbane Home Loans, our specialists are experienced at working with First Home Buyers and over the years, have identified mistakes first home buyers make and established a program that assists in avoiding such mistakes. Take the time to read the article and supporting articles as it will help you immensely in your journey to your first home.
1 UNDERESTIMATING YOUR BORROWING POWER
It is important to ensure you have a realistic understanding on what your financial position will allow you to purchase. Many first home buyers will become entangled in the excitement of owning a dream-mansion in a high-profile suburb, leading some to disappointment when this becomes unattainable.
An important step in purchasing your first home is to know what you can afford to borrow which is determined by your ability to make regular repayments on your home loan. Establishing your maximum lending capacity is fundamental to avoid disappointment.
2 MISSING OUT ON THE BENEFITS BRISBANE HOME LOANS CAN OFFER
Another mistake first home buyers make is trying to do it alone.
Many first home buyers are daunted by the prospect of making the largest financial commitment of their lives, and many falsely believe that they must navigate this process on their own. Generally, first home buyers are guided by parents, family, and friends. Online research can also sometimes assist but often can make things even more confusing.
Reaching out to a professional mortgage broker is another way of wading through the minefield. Brisbane Home Loans is focused on helping first home buyers early when they start to save for their deposit. They understand the challenges faced by First Home Buyers and they break down the process to make it easier to understand. Brisbane Home Loans offers first home buyers, and online database of useful information published by professionals in their specific fields. They also offer seminars, and online help lines where first home buyers can ask questions.
Find out here how engaging Brisbane Home Loans will help first home buyers understand the buying process, save money, and ease the daunting process and hopefully avoid a mistake first home buyers make in Brisbane.
3. NOT UNDERSTANDING ALL THE COSTS INVOLVED
Purchasing your first home involves costs which often you may not be aware of. This can delay your purchase or introduce challenges that can result in lost money. Understanding and planning for the costs involved in purchasing your dream loan is important to save and budget accordingly.
You can avoid being blind-sided by unplanned fees by seeking information from your Mortgage Broker early.
This article from Brisbane Home Loans, provides a good understanding of costs associated with purchasing a new home.
4. NOT BEING AWARE OF ALL THE INCENTIVES AVAILABLE TO FIRST HOME BUYERS
Never have Australians received more incentives to purchase their first home as the Government increases grants available to first home buyers. This is evident in the report by realestate.com which states that: “first-home buyer confidence has hit an eight-year high”. This is due largely to the range of concessions and grant schemes introduced as incentives by the Australian Government.
Realerstate.com.au has reported a 40% increase in first home buyers this year versus last year which is evidence that first home buyers are responding to the opportunity created by Government incentives.
Listed below are several incentives that either result in grants being provided to First Home Buyers which in Brisbane can be up to $40,000 and in rural Queensland as high as $45,000. There are also incentives that reduce the cost of purchasing a home such as the stamp Duty Exemption. First home buyers need to familiarize themselves with these incentives and establish which ones are applicable to them.
- First Homeowner’s Grant
- Home Builder Grant
- LMI Insurance protection
- Stamp Duty Exemption
- First Home Loan Deposit Scheme (FHLDS)
Do not miss out on these opportunities to save THOUSANDS.
5. TRYING TO BUY THE PERFECT HOME
The contrast between getting into the market or buying the perfect home is always a deliberation for first home buyers. On the one hand, we ideally want our first home to be the perfect house that has everything we want. On the other hand, the longer we wait to raise the deposit to buy the perfect home the more expensive it becomes.
Depending on your saving capacity and access to money, you may need to set your expectations at a practical level that allows you to enter the market and redirect your rental money to your own mortgage.
This is even more relevant given the additional incentives available to First Home Buyers which may or may not be available in the future.
Ensure that you set realistic expectations that are aligned to your income, saving capacity and ability to meet the mortgage repayments. If in doubt consult our specialists at Brisbane Home Loans to guide you in establishing a realistic figure specifically for you.
6. OVERESTIMATING HOW MUCH DEPOSIT YOU NEED
Thanks to the fantastic range of incentives available to First Home Buyers, having a 20% deposit for your property is no longer a minimum requirement.
Discussions with your Mortgage Broker will help you understand your financial position and how you may be able to utilise the Australian Government’s First Home Loan Deposit Scheme to allow you to take out a loan with just a 5% deposit.
From July 1, 2020 the National Housing, Finance and Investment Corporation (NHFIC) will release
10,000 new spaces on the First Home Loan Deposit Scheme (FHLDS). The FHLDS was introduced in January 2020 to allow first home buyers earning less than $125,000 individually, or $200,000 for couples, to apply for a loan with a deposit as little as 5% of the property price.
Under the scheme the Government will guarantee the remaining 15% of the deposit for properties priced under $475,000 in Queensland capital cities and $400,000 in the rest of the state (each state will have their own designated price caps on properties).
The NHFIC website provides a tool for understanding if your area is deemed to lie within a capital city or regional area.
By reaching the total 20% deposit requirement, this means that First Home Buyers under the FHLDS scheme will no longer be required to pay for Lenders Mortgage Insurance (LMI).
This article by Brisbane Home Loans explain more so you can avoid a mistake that first home buyers make:
7. NOT KNOWING HOW TO MAKE AN OFFER
It is important that first home buyers are aware of the do’s and don’ts when it comes to making an offer on a property. Getting this wrong can be costly to say the least. Prior to making an offer on a property, first home buyers should have a good understanding of the standard practices used in the real estate industry.
To avoid one of the common mistakes first home buyers make, Brisbane Home Loans has compiled as list of considerations which can give you the best opportunity in securing your perfect house.
8. NOT HAVING THE RIGHT CONDITIONS IN YOUR PURCHASE CONTRACT
Once you sign a contract there is a cooling off period where you can crash the contract, however there is a cost to this so tread carefully! But once the cooling off period is over, you are locked into the contract and the terms of the contract.
Some agents may suggest to you that you can change your contract at any time. Do not believe that for one minute. Ensure that you have your contract reviewed by a qualified Lawyer and that you understand any conditions included in the contract.
Where you as a buyer, you have a need for your own conditions, you must also ensure that these conditions are correctly included in the contract. For example, if you are waiting for some money to become available to make a deposit payment, then the timing of this payment should be reflected in your contract through conditions.
Ideally, you should have identified a good Lawyer that will review your purchase contract before you sign it.
9. NOT UNDERSTANDING WHEN TO PURCHASE HOME INSURANCE
Another common mistake first home buyers make is not getting insurance cover for their property when they first sign the contract.
Many first home buyers are not fully aware of the correct timing to purchase home insurance for their property. Arranging insurance on your property is the first thing you should do after entering a purchase contract.
10. OVER-RELIANCE ON ONLINE CALCULATORS
One of the first time home buyer mistakes to avoid is to use online calculators as the only source of information.
Online calculators are fantastic in providing First Home Buyers with a very broad idea of how much they can afford to buy, as well as providing an estimate of mortgage repayments. Unfortunately, these calculator systems are often highly inaccurate. Some cases have seen estimates provided by online calculators being $100,000 different to what the same bank will lend.
The best way to find out how much you can borrow is by chatting to our team at Brisbane Home Loans and if applicable we can guide to a loan pre-approval which can give you confidence to purchase up to a nominated price and know that the money will be available from the lender. Contact us today!
Why Choose Brisbane Home Loans
You're In Good Hands
Brisbane Home Loans is all about good old fashioned personal service without exception.
We Find The Right Deal For You
We take the time to listen to your needs and then search the market for the best products that satisfies your needs at the lowest possible cost to you.
We continue to work for you after the deal is finished, ensuring that we asess any new offers that become available which may improve your current deal.
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We give our clients access to Personal Loans, Home Loans, Investment Loans and Commercial Loans. You always only deal with on person for all your lending services.
How We Work With Our Clients
We can meet clients in our office, in their home, their office or the local coffee shop. Our initial interview will helps us understand the clients needs in the short, medium and long term so that we can find the best possible lender for your loan.
The world of financing continues to be more and more complicated. Our Lenders have experience in finding the right product to meet the specific needs of each of our clients. During this phase, we identify two to three options that may be suitable.
Our Lending Specialists will present to you a number of options available outlining the differences, benefits and downfalls of each option presented. Our preferred option and reasons why, we consider this the best fit for you will be clearly explained.
Our Lending Specialists work with our clients to have all documentsation signed, submitted to the lending institution and processed through to approval.
We pride outselves on client service which is why our Lending Specialists establish a reasonable review timeframe where they touch base with our Clients to ensure everything is working as planned. During this review, the client is made aware of any new financing options in the market.
Brisbane Home Loans is not about one off loans. We truly care about our clients, which is why we stand by their side beyond the completion of the loan.
Being Our First Home It Was Great Having The Knowledge of Daniel & The team at Brisbane Home
We have been working with Daniel and the team at Brisbane Home Loans for the purchase of our first home, being first home buyers it has been great having the knowledge of Daniel & the team at Brisbane Home Loans to support us. We can’t thank them enough for their support and making themselves available to answer all of our questions. I’d highly recommend Brisbane Home Loans.
We Saved More Than 1% On Our Existing Home Loans
We didn’t realize how important it was to review our home load until we engaged with Daniel and Jordan at Brisbane Home Loans. They helped in submitting our application which resulted in a saving of over 1% in interest on our loans, plus a reduction in our on going bank fees. I would recommend this business and thank Daniel and Jordan for making the process so easy.
Sam and Nicky
It was Our First Home and We had No Idea. Thanks to The Team From Brisbane Home Loans
Daniel and the team at Brisbane Home Loans were super helpful and friendly to me as it was my first home loan and I had no idea! They answered all my questions and were very hardworking. Would definitely recommend to a friend.
They Made Buying Our First Home Easy and Fun. Thanks
The team at Brisbane Home loans have been super helpful and extremely professional to assist us with all our first home questions.
will be recommending them to everyone I know looking to buy!
Thanks for Helping me Turn my Dream into a Reality
Service was great, very informative and kept me up to date on all progress and all steps. Follow up after it was all done and dusted was also great. Took the stress out of it which was a great help for my busy life. I would totally recommend Dan and Jordan to anyone.
Thanks for helping me get my dream into a reality.
Car Loan Approved In Less Than 3 Hours – So Wrapped
I could not believe how quickly Jordan was able to organise my car loan. He was so helpfull and I am truly greatfull.