Words: Anne Schauffer | Image: Shutterstock
It should be a really exciting time! Your first home, or at least, first purchase, but there are mistakes to be made which, with prior knowledge, can be easily avoided.
When you apply for a home loan, there are certain things which need to be taken into consideration. Chris Tyson, managing director, Tyson Properties, believes the biggest mistake made is not prequalifying yourself with a bank, prior to finding the right property.
“Often a first-time homebuyer will try to purchase a property they can’t afford and end up disappointed when their home loan application is declined. This is mainly because other costs related to running a home haven’t been taken into consideration, such as rates and maintenance.”
Richard Gray, CEO, Harcourts SA, concurs, “Your monthly calculations need to be accurate, and they must accommodate budgetary fluctuations. We often find first-time buyers over-extend on affordability and, in the end, lose a home they have sacrificed so much for.”
Dr Andrew Golding, chief executive, Pam Golding Property group, suggests first-time homebuyers obtain prequalification from a financial institution or mortgage originator such as Ooba. It can be done online in a few minutes. “This ensures you are looking for a property in the right price range and not setting yourself up for disappointment if you see the house of your dreams and are unable to afford a large enough bond.”
Not really hidden, but some you may not know about, and others may be forgotten in the excitement of purchasing the property. Golding says, “Consider all the financial implications of buying and owning a home. There are the initial costs of transfer duty and legal fees as well as factors like connecting your electricity, the cost of the move, and monies that need to be spent on the house such as curtains. Then there are the usual costs as well as budgeting for maintenance.”
Gray believes it’s imperative that first-time buyers make use of technology to gain a deeper understanding of the regions in which they wish to purchase. “Property portals, print media and other resources give great insight into the property market from a regional perspective. Take a look and gauge your requirements against the market average.”
Think long-term Property isn’t a short-term purchase or investment. Golding suggests you ensure that the property caters for your longer-term needs. “It is always advisable to buy the ‘cheapest’ house in the best area you can afford, as the cost of moving is high. Transfer duty and agent’s fees are sunk costs and eat into any capital gain you make with the sale of your property. If you intend having a family, be sure to choose the area zoned for the schools you want your children to attend and be aware of the cost of travelling to work, including both petrol and time.
Partnering with a local expert
As a first-time buyer, it’s ideal to have somebody to rely on. Gray suggests you partner with somebody who really knows the area and the industry, “Your local real estate expert with an extensive footprint in your target areas, will have an in-depth understanding of your main challenges and queries. I suggest you play open cards and build a relationship with the agent, and that way, avoid some of the major hurdles.”