Buying your first home is a monumental milestone. It's exciting, filled with anticipation, but, let's face it, can often be a bit overwhelming. For first-time home buyers, millennials, and new families, the home buying process can be fraught with pitfalls. To help you avoid common mistakes and make informed decisions, we've put together a comprehensive guide on the top mistakes to avoid when buying your first home.
Skipping the Home Inspection
Mistake: Skipping the home inspection (survey) to save time or money can lead to hidden issues that may cost you dearly in the long run.
Actionable Advice: Always invest in a thorough home inspection. Hire a professional to check for structural issues, electrical systems, plumbing, and more. Ask questions like:
Are there any signs of water damage?
Is the roof in good condition?
Are there any pest infestations?
Buying a House You Can't Afford
Mistake: Falling in love with a home that's beyond your budget can lead to financial strain and potential foreclosure.
Actionable Advice: Determine your borrowing capacity before you begin house hunting. While there are many affordability calculators online, working with a mortgage broker is often more effective.
Not Getting Preapproved for a Mortgage is a Top Mistake to Avoid When Buying Your First Home
Mistake: House hunting without mortgage preapproval can lead to disappointment and wasted time.
Actionable Advice: Get preapproved for a mortgage to have a clear understanding of what you can afford. Known as a mortgage Agreement in Principle (AIP), this also makes you a more attractive buyer to sellers.
Not Saving Enough for a Deposit
Mistake: Entering the home buying process with insufficient savings for a deposit can limit your options and increase your monthly mortgage payments.
Actionable Advice: Aim to save at least 5% of the home’s purchase price as a deposit. Consider setting up a separate savings account specifically for your home deposit and take advantage of government schemes, such as the Lifetime ISA.
Focusing Only on the Price
Mistake: Making an offer solely based on the listed price can lead to losing out on a great property or overpaying for a subpar one.
Actionable Advice: Consider the overall value of the property, including location, amenities, condition, and potential. Check how long the property has been on the market, a lengthy period could warrant a cheeky offer! Ask the seller why they are moving. Be prepared to negotiate and don't be afraid to walk away if the price doesn't align with your budget.
Inadequate Research
Mistake: Going it alone without adequate research or leaning solely on your bank for mortgage options can lead to missed opportunities and higher costs.
Actionable Advice: Conduct thorough research on mortgage options. Engage with a mortgage broker who can provide multiple options tailored to your needs. Brokers can often secure better deals than going directly through your bank.
Draining Your Savings
Mistake: Using all your savings for your deposit and purchase costs leaves no financial cushion for emergencies.
Actionable Advice: Keep an emergency fund aside for unexpected expenses that come with homeownership. Aim to have at least three to six months of living expenses saved up.
Making Emotional Decisions
Mistake: Allowing emotions to drive your buying decision can lead to overlooking critical issues and making poor financial choices.
Actionable Advice: Stay rational and practical. Focus on the essential features and conditions of the property rather than just its aesthetic appeal. Create a list of non-negotiables and stick to it.
Ignoring the Neighbourhood
Mistake: Focusing solely on the house and ignoring the neighbourhood can result in a less-than-ideal living situation.
Actionable Advice: Research the neighbourhood thoroughly. Consider factors such as:
Proximity to work, schools, and amenities
Crime rates
Future development plans
Community vibe
Not Checking Your Credit Report
Mistake: Neglecting to check and improve your credit report can result in higher mortgage rates or even denial of the mortgage.
Actionable Advice: Check your credit report early in the home buying process. Address any discrepancies and improve your credit score by paying down debt and making timely payments.
Neglecting Proper Protection and Insurance
Mistake: Ignoring Critical Illness Cover, Life Cover, and Income Protection can lead to serious financial problems if you can't work because of illness or injury. Relying only on comparison websites might result in getting lower-quality coverage than what's available in the wider market.
Actionable Advice: Start by researching and securing enough Critical Illness Cover and Life Cover, along with Income Protection, to protect your finances. Your mortgage broker can help, but make sure they have access to a wide range of providers to offer you different options. Also, ensure you have comprehensive home insurance that covers various risks for full protection.
Conclusion
Buying your first home is a significant and rewarding achievement, but it's essential to avoid these common mistakes to ensure a smooth and successful process. By conducting thorough research, getting preapproved for a mortgage, saving adequately, and making informed decisions, you can avoid potential pitfalls and enjoy homeownership with peace of mind.
Have more questions but ready to move onto the next stage with Beechwood?
Your home may be repossessed if you do not keep up repayments on your mortgage.
As with all insurance policies, conditions and exclusions will apply.
Published by Beechwood Mortgages Ref: 219335 with review and approval from Stonebridge Mortgage Solutions Limited who is authorised and regulated by the Financial Conduct Authority Ref: 454811.
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