08 Nov 7 Common First Home Buyer Mistakes You Can Avoid
The process of buying your first home can be more challenging than expected. If you’ve been struggling to secure a mortgage, you could be making common first home buyer mistakes without even realising it. Knowing what these mistakes are and how to avoid them can help you increase your chances of securing your mortgage pre-approval.
Read on to learn what first home buyers need to know to avoid pitfalls and make the home-buying journey as smooth as possible.
1. Selecting an interest rate that doesn’t suit you
One of the biggest mistakes first home buyers make is locking in a mortgage rate without fully understanding the options. Many buyers focus solely on finding the lowest rate, overlooking other important factors like loan terms and conditions. Even if you don’t foresee the need to adjust the loan terms or switch between a fixed and floating rate, it’s important to be aware of any hidden fees or penalties that could apply. These can significantly impact your finances if you later decide to make adjustments.
Both fixed and floating rates have pros and cons, and understanding them can be tricky. Consulting a Mortgage Adviser can help you weigh these options so you’re confident in making a well-informed choice.
2. Overlooking the importance of location
There are two common mistakes first home buyers make regarding location. Some buyers focus so intensely on the property itself that they overlook the importance of location. Finding a home that checks all your boxes can be exciting, but it’s important to evaluate the surrounding neighbourhood to ensure it aligns with your lifestyle.
On the other hand, some buyers don’t consider a broad enough range of locations. Remember, your first home doesn’t have to be your forever home. Casting a wider net will open your options and offer more flexibility in terms of affordability.
3. Skipping a pre-purchase inspection
Professional inspections are highly recommended when buying a house, and neglecting to organise one could result in hidden issues being missed. A property may look suitable and up to scratch at first glance, but there may be red flags that an inspection is more likely to pick up on. Arrange for a pre-purchase inspection to avoid potential repairs or renovations down the line, which can cause unexpected costs to pile up during an already financially strained time of your life.
4. Not researching government support options
One major mistake many first home buyers make is not fully exploring the available government support schemes. In recent years, many New Zealanders are using their KiwiSaver funds to help cover their first home deposit. Another option is the First Home Loan scheme run by Kāinga Ora which lowers the required deposit for a home from 20% to 5%. Even if you don’t use these options, understanding their availability and terms provides valuable insight for making informed decisions.
5. Underestimating extra homeownership costs
Saving for a deposit and calculating mortgage repayments are naturally top priorities for first home buyers. Although these are essential to buying your first home, underestimating the peripheral and additional costs of owning a house can be stressful and negatively impact your first home experience. Building inspections, insurance, and legal fees can quickly add up during and after buying a home. Budgeting for these expenses as part of your financial preparation will help you avoid over-committing.
At Max Mortgages, our Mortgage Advisers are here to help you every step of the way. Not only do we work with you to find the most suitable home loan, but we also help you understand the full scope of homeownership costs. In addition, our experienced Insurance Advisers at Max Insurances specialise in comparing a range of house insurance options to find the policy that best suits your needs and budget. With our support, you can focus on the excitement of owning a home, knowing you’re fully prepared for every aspect of homeownership.
6. Not tidying your finances before starting the mortgage process
Evaluating your bank statement and credit history is an important step to getting your mortgage approved. Whether pursuing a first home through a bank or an alternative lender, your financial history will be put under close examination. To help minimise the possibility of being declined, start cleaning up your bank statements so that late payments and overdraft fees won’t be scrutinised when it comes to mortgage approval.
7. Overspending right after mortgage approval
While it can be tempting to start furnishing your new home as soon as your mortgage is approved, it’s wise to hold off on significant or luxury purchases until you’ve settled in. Keeping debt to a minimum during this window is ideal. Creating a wish list of items you’d like isn’t risky, but rushing into purchases before adjusting to your new budget with mortgage costs can be.
How a Mortgage Adviser can help you avoid these mistakes
Navigating the mortgage process on your own can be overwhelming. With extensive knowledge of the housing market, a Mortgage Adviser can provide the guidance you need, helping you avoid common mistakes, big or small. If the banks have declined your application or if you’re struggling to find a suitable mortgage plan, reach out to Max Mortgages for a chat. Our award-winning team of Mortgage Advisers is here to help you restart your journey towards finding your dream home.
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