Buying your first property can be a bewildering experience, and there are any pitfalls that could lead to potentially expensive regret. With careful research and financial management, you can buy the right property for your needs while establishing a sound financial investment.
Start small and think long-term
Property appreciates in value and the toughest part of the journey is actually making that first step into the property market. Rather than having your heart set on a waterfront mansion, think small for your first purchase – look at for a property you can afford more easily, which will work as a step up towards something more aspirational. Your small property will increase in value while you build equity, and this is the ideal foundation for a valuable property portfolio.
Calculate how much you can afford to invest
It can be tempting to spend a little more on the “best” property, but realistically, you want to stay within a budget where you can gradually build equity and increase the value of your investment. Your circumstances can change over the long term, so you want to calculate conservatively, based on what you can afford to pay off.
Saving for your deposit is an excellent “practice run” to calculate how much you can afford to spend on mortgage payments each month. Best of all, while you are saving, you can’t fail! If you find that you have over-estimated, you simply need to reduce your monthly savings, while you still have a growing deposit.
Save a substantial deposit
The bigger your deposit, the more flexibility you gain – you will have more options for attractive home loan rates, you will have a wider range of choices when purchasing and your repayments will be easier to manage.
Do your research
When you find the right property, start by researching the market value of the home. You may be able to negotiate the price down, if you know that other comparable houses are priced lower. Also research any council plans for the area, and other logistical aspects of the property, such as proximity to public transport and shops.
Most importantly, request a property inspection to see if there are any issues regarding structure, water or electricity. Some issues might give you some leeway to renegotiate the asking price, while other issues might have you reconsidering the purchase due to potentially expensive repairs or dangerous living conditions.
Seek financial expertise
Talk to a financial expert, such as a mortgage broker, to establish the best loan package for your needs and to help you navigate all the legal and financial paperwork involved in purchasing a property. The right home loan can make a huge difference by reducing the amount of interest you need to pay over the long term and helping you pay your loan off faster.