The idea of buying your own property is exciting. However, without proper research and planning, you may end up with expensive mistakes.
From underestimating expenses to choosing the wrong loan, many major pitfalls can completely ruin your life-long investment.
Whether you’re buying your first property or are an experienced real estate investor, learn about all the common mistakes and navigate them smartly!
1. Not fixing a budget
The most important part of searching and buying a home is setting up a budget. If you sign up for a house without knowing your spending capacity, you’ll only attract trouble.
For starters, don’t compare properties based on the down payment or deposit value alone. Besides this, you must also account for other expenses, including the EMI, property taxes, solicitor’s charges, renovation and furnishing, utility bills, and mortgage. Consider whether you’re also repaying other loans as well.
Based on all of these expenses and your monthly income, build a budget to buy your home.
2. Inadequate research and background information
Without thorough research, you may end up investing in the wrong property. If you don’t identify crucial details, you may get scammed. So, perform these steps thoroughly:
a. Identify the preferred localities in which you want the property. Learn about the expected appreciation in property value in the locality. Avoid investing in localities where the property value might fall.
b. Get an estimate of the average property around that locality. This will prevent any bad financial move, i.e., overpaying or investing in an undervalued property.
c. Verify legal documents of the property and ensure ownership legitimacy. This can be done by investing in a property title search from a reliable provider. In this, you’ll get major information such as
- Current owner details
- Volume and folio/title reference number
- Survey plan type and number
- Any unregistered dealings
- Any caveat against the title
- Registered mortgage on the property
d. Research some of the best builders who have worked in said zone. Check their track record, previous projects, and online reviews. This helps you invest in the right contractors.
3. No home loan comparison
Often, first-time property buyers assume that all home loan lenders levy the same interest rate on their loans. So, they invest in the first lender they visit.
However, that’s completely wrong, and lenders often have different interest rates. So, conduct extensive research on all options to find the best one for your finances.
4. Buying the first property
Property hunting is quite tiring. It’s difficult to spend so much time looking around and keeping up with all the information about each property. Often, buyers settle for the first property within their budget that looks aesthetic.
However, such judgments are short-sighted and lead to major mistakes and regrets. Even if it’s an urgent investment, take your time to find several properties that cater to your needs.
Visit each of them again at different hours and on different weekdays to understand the amount of noise and how busy the locality can get. Compare your choices, and only then settle for one.
5. Doing everything alone
From searching to buying property, the entire journey is complicated. If you don’t have enough experience and knowledge in this field, don’t try to do everything alone.
If you want, you can ask your friends and family for some ideas, whether about property location, size, or anything else.
You must also seek professional help to ensure you invest your time only in the best properties based on your needs and budget.
Additionally, seek an attorney to navigate all legal complications swiftly. This can help you find the right property and bypass any problematic deal efficiently.
6. Overbidding
After finding the ideal property, most buyers become anxious due to the competition of other bidders and inflation.
The best properties always have several buyers competing for them. Further, trends show that in the March quarter of 2024, the total value of Australian residential properties increased to $10720.7 billion from $10511.4 billion in December 2023.
Out of anxiety and worry, buyers often bid way more on properties. This leads to excessive debt and higher EMIs, which you can’t keep up with later on. It may lead to major financial blunders and take you longer than expected to clear all debts.
Avoid overbidding by researching the value of similar properties in the locality and bid appropriately.
Conclusion
With these crucial mistakes in mind, be careful while navigating the property industry. Make well-informed decisions, and you’ll make the perfect investment!