10 big mistakes to avoid when buying a home
Buying your first home? Learn the 10 most common mistakes Australians make, from skipping pre-approval to underestimating costs and how to avoid them.
There’s no doubt that purchasing a property is one of the biggest financial decisions you can make. And while the process can be an exhilarating one, it can also be fraught with risks and complexities.
To help you navigate your home-buying journey without any headaches, we’ve put together a list of common pitfalls that prospective homebuyers should be aware of.
By taking care to avoid these mistakes, you can enjoy a smooth process that leads straight to your dream home.
1. Not getting conditional approval
One of the first steps in buying a property is obtaining conditional approval (also known as pre-approval) for a mortgage. This step is crucial because it:
- Sets your budget so you can narrow your property search
- Shows sellers that you’re a serious buyer with likely financing
- Speeds up the purchase process once you find a suitable property
2. Overlooking additional costs
When embarking on their property-buying journey, many people focus solely on the ‘obvious’ costs - like the deposit and mortgage repayments. However, there are many other costs involved with buying a property, such as:
- Stamp duty and legal fees
- Building and pest inspections
- Moving and furnishing expenses
3. Not being realistic about your budget
In the excitement of buying a home, it’s easy to stretch your budget too far. However, it’s really important to:
- Stick to a realistic budget based on your lifestyle and savings
- Consider future changes in your income or living expenses
- Factor in potential interest rate rises
4. Bailing on the building inspection
Skipping the building inspection to save money can end up costing you a lot more down the line. A professional building inspection can reveal:
- Structural issues or required repairs
- Potential pest infestations
- Compliance with building codes and regulations
5. Getting blindsided by the ‘perfect’ home
Of course, it’s important to find a home you truly love. However, letting your emotions get in the way of a sound financial decision can lead to:
- Overlooking critical flaws or issues
- Bidding over your budget at auction
- Rushing into a purchase without proper research
6. Underestimating the value of location
While you may be focusing on the property itself, remember that the location and surrounding area is a critical factor. When considering where to buy, think about:
- Distance from important places such as work, schools, and amenities
- Potential for growth and the property’s resale value
7. Not thinking about the future
We all know that life is full of changes, and your current needs may be very different to what you’ll require in a few years. You might need to consider:
- Whether your home can accommodate a growing family
- If the property will still be suitable as you or your family get older
- The scope for renovations or extensions
8. Moving too fast
We’ve all heard of buyer’s remorse - that feeling of regret after jumping into a purchase decision. One way to avoid this is by taking your time to:
- Check out different suburbs and property types
- Carefully consider the pros and cons of each property
- Come to a decision based on the facts, without feeling pressured
9. Ignoring the details of your loan
While the interest rate is important, it’s not the only feature of your loan that you need to consider. Pay attention to:
- How flexible your loan is, such as the ability to make extra repayments
- Any additional fees associated with the loan
- The type of loan (fixed vs variable) and the implications of this
10. Failing to plan financially
Remember that a home is a long-term financial investment. To ensure you make the best decision, think about:
- Whether the property aligns with your future financial goals
- The stability of your income and career prospects
- Future market trends and economic conditions
Buying a home is a huge milestone - and finally getting on the property ladder is a fantastic feeling. However, it’s important to approach the process with care. By being aware of the potential pitfalls that come with purchasing a property, you can act with confidence and find a home that fits all your needs and goals.
Keen to learn more about the home-buying process? Check out our other articles and stay in the know about all things home loans.
Unloan is a division of Commonwealth Bank of Australia.
Applications are subject to credit approval, satisfactory security and you must have a minimum 10% deposit or 10% equity in the property (LVR below 90%). Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. You cannot borrow more than $2,000,000 of above 80% LVR loans. In some cases depending on the property’s location or type, we may only be able to lend you up to 70%.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan. The loyalty discount is applied to your variable rate at the relevant time, and this rate may increase or decrease over your loan term. For more information view our rates and features.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Unloan is a division of Commonwealth Bank of Australia, and Commonwealth Bank does not provide tax (financial) advice under the Tax Agent Services Act 2009 (Cth). You should consider seeking independent tax advice from a registered tax agent, accountant or adviser before you make any decisions based on this information.
Applications are subject to credit approval, satisfactory security and you must have a minimum 10% deposit or 10% equity in the property (LVR below 90%). Minimum loan amount $10,000, maximum loan amount $10,000,000, and total borrowings per customer across all Unloan loans is $10,000,000. You cannot borrow more than $2,000,000 of above 80% LVR loans. In some cases depending on the property’s location or type, we may only be able to lend you up to 70%.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan. The loyalty discount is applied to your variable rate at the relevant time, and this rate may increase or decrease over your loan term. For more information view our rates and features.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
Applications are subject to credit approval, satisfactory security and minimum deposit requirements. Full terms and conditions are found on our Unloan Terms and Conditions. Modified Terms and Conditions will be set out in our Notice of Variation Agreement, if you are approved. This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice.
Unloan offers a 0.01% per annum loyalty discount on the Unloan Live-In rate or Unloan Invest rate upon settlement. On each anniversary of your loan’s settlement date (or the day prior to the anniversary of your loan’s settlement date if your loan settled on 29th February and it is a leap year) the margin discount will increase by a further 0.01% per annum up to a maximum discount of 0.30% per annum. Unloan may withdraw this discount at any time. The discount is applied for each loan you have with Unloan. The loyalty discount is applied to your variable rate at the relevant time, and this rate may increase or decrease over your loan term. For more information view our rates and features.
*At Unloan, we do not charge any annual, application, banking, account, transaction, late or exit fees. Government fees may also apply. Learn more about government fees here. Your current lender may charge an exit fee when refinancing.
