1. Borrowing above your limit
Find out from a mortgage broker how much you can comfortably borrow, including costs such as stamp duty and solicitor’s fees. It’s a good idea to have pre-approval before beginning your property search. Not only does pre-approval provide peace of mind, but it helps you with negotiations because the seller knows you are ready to buy.
2. Underestimating the full cost
Additional costs when buying a property include stamp duty, building & pest inspection, mortgage insurance, solicitor fees and moving expenses – they add up. Simply Google ‘Qld stamp duty rates’ to find an online calculator to estimate how much stamp duty is payable.
3. Not doing a building & pest inspection
I recommend engaging a competent inspector to check the structural soundness of your potential new home and check that it isn’t full of termites. Remember, these inspectors are trained to find faults, so don’t be surprised when they produce a long list of ‘defects’. Look out for major faults but don’t be concerned about minor faults – most things can easily be repaired.
4. Not doing enough research
A wise home buyer will get to know the area in which they are interested in buying. You’re also buying a location, so check out local schools, shops, and access to your workplace. It can be a good idea to check out how busy roads are at different times of day – 11am may be very different to 8am or 3pm.
5. Not having the right protection clauses inserted into the contract of sale
The standard REIQ contract provides you with a five day cooling off period. But most buyers also make the contract subject to finance and subject to a building & pest inspection. These clauses are there to protect the buyer, not the seller. There are no protection clauses when buying at auction as this is a cash purchase.
6. The ‘Fed Up’ Purchase
A big mistake to make is to buying a property in desperation. I’ve seen people buy a property as a compromise, rather than something that really suits their needs. If you really can’t find the right property, maybe engage a buyer’s agent and for a fee, they will help you find the property you want, or perhaps consider renting for a while.
7. Buying a property as an investment and to live in
Quite often a property that is a good investment may not be the ideal property for you to live in, and vice versa. It’s sort of like trying to buy a car that will take you camping at Fraser Island as well as race around a track on the weekend. Two different purposes altogether. My suggestion is be clear about what you want and separate investment goals from lifestyle goals.