Nine avoidable first-time buyer mistakes

Buying your first home can – and should be – a very exciting experience and, for many, it’s a lifelong dream but it’s also a lengthy process that’s peppered with potential pitfalls and it can be overwhelming, so it’s easy for first-time home buyers to make some mistakes along the way.

However, whilst some mistakes are minor irritations, others can be costly and cause delays or even cause you to lose your dream home.

And, unfortunately, buyer’s remorse isn’t uncommon amongst first-time buyers which is usually as a result of neglecting to do their homework and ensure that they are thoroughly prepared.

It really is a case of ‘a stitch in time saves nine’ because if you have a clear understanding of the process and what is required along the way, and have devised a clear plan of action, you can easily avoid costly mistakes that could turn your dream into a nightmare.

Now, more than ever, it’s essential to have experienced property professionals onside to guide buyers, especially those who are purchasing in a tumultuous market for the first time.

The following are common – and avoidable - first-time buyer mistakes:

Most first-time buyers have an idea of the type of home in which they would like to live, but many don’t realise that there are a number of other critical factors to consider which will impact their daily lives for years to come.

It’s no good loving your house but hating your neighbourhood or enduring daily stresses that could have been avoided.

Would you prefer to live in a peaceful, suburban environment or a vibrant neighbourhood with nightlife? Do you need to be close to work or schools? Do you go out to socialise often? Do you have time to take care of a garden or would a lower maintenance option suit your lifestyles better?

Few first-time buyers can afford to pay cash and will have to save for deposit and apply for a bond for the balance and, unless they have an idea of how much banks are willing to lend them, they are literally shooting in the dark.

The best way to establish this is by obtaining pre-qualification which not clarifies how much they can afford to spend and the type of bond deal they can expect from a bank, it also affords them the peace of mind that their credit record is in good standing,

It’s easy to be tempted to buy a property that stretches your budget to its limit, but overextending yourself is never a good idea as you risk losing your home if the unexpected happens and you fall on tough financial times. You’ll also have less wiggle room in your monthly budget for other bills and expenses and interest rate fluctuations.

Buying a home is a complex process and attempting to rush things can cost you dearly down the line. You may not be able to save enough for a deposit and the associated costs, addressed items on your credit rating and it’s more difficult to make informed decisions when you’re in a hurry.

Take the time to map out your home-buying timeline well in advance; work out how long you will need to save money, repair a poor credit etc etc before you can apply for pre-approval.

The two most critical requirements for loan approval are a good credit rating with a track record of repaying contractual debt responsibly and also being able to afford the monthly bond instalment.

One of the key factors that banks take into consideration when determining affordability is an applicant’s income-to-debt ratio, so it makes sense to start reducing debt and increasing your disposable income as soon as they even start to think about buying a home.

Many people assume that because they have banked with one bank for a number of years, they will automatically get a better interest rate there than from any other institution, however, this is not the case.

Shopping for a mortgage is much like shopping for a car - it pays to compare offers. And one of the best ways to do so is to utilise the services of a bond originator like ooba to source the best financing option.

They don’t charge for the service and their access to multiple lenders enables them to negotiate on your behalf and to obtain the best available deal, thereby saving the homebuyer thousands of Rands in interest over the term of the bond.

Buying a house is not merely a financial investment, it’s also an emotional one as you are choosing the place where you’ll raise a family, make memories and create a space that’s truly yours, so it’s easy to get caught up and make emotional rather than logical decisions.

You don't always have to make a full 20% down payment but the bigger the better as paying too small a deposit is one of the most common regrets amongst first-time buyers who misjudged the importance of smaller monthly bond repayments down the line.

Unless you are buying a brand-new home, chances are that you’ll most likely have to do unexpected repairs not too long after you’ve moved in and you could quickly find yourself under pressure if you have drained all your savings to buy the property.

You also have to bear other factors in mind like the fact that you may use more electricity than in your previous home, your water bill will be higher if you have a pool and you will have other monthly bills like rates and home insurance.

A final word of advice: It’s also a good idea to show the property that you are thinking of buying to friends or family members who know you well and will advise you with your best interests at heart.

Being prepared will not only minimise the stress of the process, it will allow you to save money from the get-go and will minimise the possibility of ending up with a mountain of unforeseen debt.