Tips for buying your first home: avoid these common mistakes
What are some common mistakes made by first home buyers? Find out how to avoid them and get ready to buy your first home
Buying your first house is exciting and fun, but it can also be daunting. There’s so much you don’t know, and the fear of doing the wrong thing can be overwhelming.
But you don’t have to be scared of the first time home buying process – by doing your research, enlisting help from experts, and completing your due diligence you're setting yourself up for success.
To help, we've compiled this list of common first home buyer mistakes, so you can avoid them in your own journey.
Common first home buyer mistakes
1. Don't break the bank
The word we all fear: budgeting.
Among the very first steps in buying a home is working out what you can afford. You'll need to weigh up how much you want to spend vs. the type of property, and the area in which you're want to buy.
This can take time, but is essential to the rest of your journey. Remember, there are useful guides out there, like our Property Insights tool that can help you get a feel for house prices in a given city or suburb.
Drawing up a budget is one thing, stick to it is quite another. At the end of a long house hunt, it's all too easy to throw your budget out of the window if you find the 'perfect' property.
Don't. Don’t fall in love with an unattainable house – keep your budget in mind at all times. This includes in high pressure environments like auctions where your offers are cash unconditional, meaning there's no going back.
By getting pre-approved for a mortgage you’ll know exactly how much you can spend and hammer it into your mind that spending a single cent more can lead to total disaster.
When you set your budget, don’t forget to factor in the many ongoing costs associated with buying a house, and include conditions in your offer that will protect you.
It's important to know your budget when hunting for your first home.
2. Don't make things harder than they should be
There are several schemes designed to help New Zealanders buy their first homes, so don't forget to look into them as you get started. They include:
• Using your KiwiSaver:
Many Kiwis will be able use KiwiSaver for their first home purchase. This could be either through KiwiSaver first home withdrawals, or KiwiSaver First Home Grants.
• The First Home Loan Scheme
This used to be known as the Welcome Home Loan, and can reduce the standard 10-20% deposit required by most NZ home loan lenders to 5% of the house price.
3. Don't be afraid to ask questions
It starts at the open home. Approach it the same way as taking a car for a test drive. Does everything work? Is there any serious wear, tear or other damage?
Your first house is rarely going to be a dream house, but it also doesn’t need to be such a complete disaster that the roof leaks and all the piles need replacing.
How do you avoid this? Always get a builder’s report – you can do this before you make an offer or as a condition of your offer. As well as asking your builder what issues exist, get an indication of how much they would cost to fix or replace.
Also, ask the real estate agent about any potential problems. They’re legally obliged to answer honestly and not to knowingly withhold any information they're aware of about the property.
A little guide to open homes
Some major things to look out for include:
- the condition of the roof.
- any signs of water damage.
- the piles.
- plumbing and wiring.
- possible drug contamination.
- whether boundary fences are placed correctly.
4. Don't think too short term
When you're buying your first house and face steep competition from other buyers in a tight property market, it can be tempting to spend every cent in your budget. But will you get that money back when it’s time to move on?
Be smart. Do your market research and don’t leave yourself in a bind when it’s time to sell up and take your next step up the property ladder.
Take a look at our Property Price Index to see what the market is doing in your region, and for your preferred type of property. The Index is produced from data on properties listed on Trade Me Property, and provides an insight into 'for sale' price trends by type and size of property.
Property Insights by Trade Me — Free access to Property Information
4. Don't forget to check out the neighbourhood
Discovering that you’ve unwittingly bought right next to a drummer of an amateur metal band after the deal is done, because you didn’t take the time to look over the back fence, is probably a bit too late. Enjoy those late night rehearsals!
Remember: you can change your house but you can’t change your neighbours. There’s a lot to be said for checking on the neighbours, and taking a walk around the whole area, at all times of day and night, before you put your offer in.
The amenities on offer in your area, such as schools, transport links, employment hubs and shops also impact the value of your house, and the convenience of your day-to-day life.
5. Don't feel you have to go it alone
It's normal to be scared about buying your first house, and the costs of consulting an expert can save you headaches and even more money down the track.
Banks have experts ready and waiting to dish out advice for first (and subsequent) home buyers. From advice on how to save a deposit, what interest rate is best, your credit score, home loan options, or how to get pre-approval – all you have to do is ask.
*This information is not intended as a complete guide, as it doesn’t consider your individual needs or financial situation. Trade Me accepts no responsibility or liability for any inaccuracies or omissions in the content. Always obtain independent legal advice before buying or selling property.
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