14 June 2019
According to new ABS data the number of first home buyers in Australia’s housing market has hit a six-year high. However, when it comes to buying a home, errors can prove costly. Industry super fund-owned bank ME highlights five key pitfalls that first home buyers need to be aware of.
1. Buying blind
Research by ME found six out of ten first home buyers failed a basic property buying literacy quiz.
When it comes to the biggest purchase of your life, it pays to know the basics. Head to ME’s free online school of money, Ed, to get up to speed – fast.
2. “Guesstimating” your borrowing power
Don’t go home hunting based on a hunch about how much you can borrow. The only way to know for sure how much you can borrow is to speak with a lender or mortgage broker.
3. Not sticking to your budget
A property survey by ME found one in five (22%) home buyers exceeded their buying budget. Of these, 46% overstepped their budget by $30,000 and 30% blew their budget to the tune of $50,000. Ouch!
An easy way to stay focused on what, and where, you can afford to buy is by having your home loan conditionally approved – it draws a very clear line in the sand.
4. Overlooking upfront costs
Buying a home comes with a range of upfront costs including legal fees, pre-purchase inspections and stamp duty.
Factor upfront costs into your buying budget to avoid nasty surprises that could see you scrounging for cash later on.
5. Assuming all loans and lenders are the same
Home loans are not a one-size-fits-all product. Different lenders not only charge different interest rates, they also offer a variety of home loan features.
The bottom line is, when it comes to a home loan, it can pay to look beyond the lender you’ve always banked with.
If you can avoid these five mistakes, you’re well on your way to enjoying a stress-free home buying experience.
This article is brought to you by ME. For more information, please visit www.mebank.com.au. Members Equity Bank Limited ABN 56 070 887 679 and Australian Credit Licence 229500.
The Trustee and ME are not agents or representatives of one another. The Trustee is not responsible for and does not accept liability for the products or services of ME. ME is an Australian credit licensee (Australian credit licence no. 229500). You should use your own judgement before taking up any product or service offered by ME. TWUSUPER invests in ME but does not receive any commissions as a result of members using ME products and services.