Buying your first home represents one of life's most significant financial milestones. For many residents in Mornington, the excitement of homeownership can sometimes cloud judgment, leading to costly mistakes that could have been avoided with proper planning and professional guidance.
Not Getting Pre-Approved Before House Hunting
One of the most fundamental errors first time home buyers make is starting their property search without securing pre-approval for their home loan. This oversight can lead to disappointment when you find your dream home, only to discover it's beyond your borrowing capacity.
Pre-approval provides several advantages:
• Clear understanding of your loan amount ceiling
• Stronger negotiating position with sellers
• Confidence during the bidding process
• Streamlined application process once you find the right property
Working with a mortgage broker who has access to banks and lenders nationwide ensures you understand your true borrowing capacity before you begin searching.
Overlooking Government Assistance Programs
Many first home buyers miss out on valuable financial support because they're unaware of available government schemes. Australia offers several programs designed to help first time buyers enter the property market:
First Home Owner Grants (FHOG): Cash grants available to eligible first home buyers, with amounts varying by state.
Home Guarantee Scheme: Allows eligible buyers to purchase with deposits as low as 5% without paying lenders mortgage insurance (LMI).
First Home Super Saver Scheme: Enables buyers to save for their deposit through their superannuation fund.
These first time home buyer programs can significantly reduce the financial burden of purchasing your first property.
Focusing Only on Interest Rates
While securing a competitive interest rate is important, fixating solely on this factor can be detrimental. Many first home buyers choose loans based purely on advertised rates without considering the complete package.
Important loan features to evaluate include:
• Offset account availability
• Redraw facilities
• Fee structures
• Loan to value ratio (LVR) requirements
• Interest rate discounts for meeting certain criteria
• Flexibility to switch between variable and fixed interest rates
A comprehensive comparison of loan features often provides more long-term value than simply choosing the lowest advertised rate.
Inadequate Budget Planning
First time buyers frequently underestimate the total costs involved in purchasing property. Beyond the purchase price and deposit, several additional expenses must be factored into your budget:
• Stamp duty (varies by state and property value)
• Legal fees and conveyancing costs
• Building and pest inspections
• LMI (if your deposit is below 20%)
• Moving expenses
• Immediate maintenance or renovation costs
Failure to account for these costs can strain your financial situation and potentially jeopardise your loan approval.
Not Shopping Around for Lenders
Many first home buyers approach their existing bank without exploring other options. This approach can result in missing out on more suitable loan products or more favourable terms.
Different lenders offer varying:
• Assessment criteria
• Loan products and features
• Interest rate structures
• Service levels
• Specialised first time home buyer schemes
Mortgage brokers provide access to home loan options from banks and lenders across Australia, ensuring you can compare multiple offers and find the most appropriate solution for your circumstances.
Rushing the Property Inspection Process
The excitement of finding a potential home can lead to rushed decision-making. Thorough property inspections are crucial for identifying potential issues that could result in significant future expenses.
Professional building and pest inspections can reveal:
• Structural problems
• Pest infestations
• Electrical or plumbing issues
• Required maintenance work
This information not only protects your investment but can also provide leverage for price negotiations.
Ignoring Future Financial Changes
First home buyers sometimes focus solely on their current financial situation without considering potential future changes. When applying for a home loan, consider how the following scenarios might affect your repayment capacity:
• Career changes or job loss
• Starting a family
• Interest rate increases
• Economic fluctuations affecting the property market
Choosing a loan amount that provides some buffer for these possibilities helps ensure long-term financial stability.
Making Emotional Rather Than Financial Decisions
The emotional aspect of buying your first home can override logical financial decision-making. While it's natural to feel excited about homeownership, maintaining objectivity during the application process and property selection is vital.
Consider each property as an investment, evaluating factors such as:
• Location and growth potential
• Rental yield if you need to lease it out temporarily
• Resale prospects
• Ongoing maintenance requirements
Seeking professional advice from experienced mortgage brokers helps maintain perspective and ensures your decisions align with your long-term financial goals. At Abundance Home Loans, our team understands the unique challenges facing first home buyers in Mornington and can guide you through each step of the process.
Call one of our team or book an appointment at a time that works for you to discuss your first home buyer options and avoid these common pitfalls.
