Common Mistakes When Buying a Home

Buying your first home can be both an exciting and equally stressful experience...

There are lots of steps throughout the process and some things may go wrong from time to time. However, at the end of the journey your efforts are rewarded with a house for you to call home!



We thought we could help ease some stresses of the home buying process by outlining some common mistakes that home buyers make so you can avoid them. Let’s get started!

Not understanding lending terms and the steps to buying a home.

Going into the home buying process with an understanding of the housing market, lending jargon and general process instantly gets you started on the right foot. That way as you undergo the home buying process, you can understand what’s in motion while dealing with your mortgage advisor, lawyer and real estate agents.

We have a guide to buying a home filled with some general information and tips. To download our home buyers guide, follow the link below.

Not considering your long-term goals and ambitions.

Before buying a home, you should always consider what your financial goals are in the next 5, 10, 20+ years to ensure the purchase aligns with these. Buying a house is a huge investment and, in many cases, a big debt that you take on.

Not using a mortgage advisor.

We may be bias, but we know first hand how beneficial using a mortgage advisor can be. The role of a mortgage advisor is to provide a helping hand across the journey to home ownership, not only finding you the best lending solution tailored to your situation, but to also communicate with the lender, lawyer and real estate agent ensuring the process runs smoothly.

Not getting a pre-approval prior to offering on a property.

Getting a pre-approval before house shopping is a an absolute must. A pre-approval not only gives you the indication of how much you can borrow but it also enables you to make a more solid offer on a property in a competitive market. This decreases any risk of having your offer accepted on a home only to find out you aren’t able to service the loan size.

Getting your heart set on a property.

It’s natural to fall in love with a property, but it’s important to be pragmatic when buying a house. Otherwise, you may find yourself overlooking issues with a property out of desire to purchase it. It's also likely that there may be interest from other parties in the property and you may miss out. Keeping your options open minimises the risk if the property you’re wanting doesn’t work out.

Not completing your due diligence

Due diligence is essential when buying a property. You want to ensure that you minimise as much risk as possible. This comes down to checking the property for any significant issues such as hazards or repairs.

Due diligence includes:

• Completing a building report or LIM report before going unconditional on a property.
• Researching the neighbourhood and looking into what the long-term value may be.
• Getting confirmation that the house is fully insurable without any exclusions.
• Complete Solicitor due diligence.
• Confirm finance conditions required by your lender.
  
  

Stretching your budget too thin without considering unexpected costs.

Often clients are so eager to get into their first home that they use as much of their savings as possible to increase their deposit size. This can lead to stress if any unexpected costs arise such as the lender needing a registered valuation or if the property needs any repairs.

Having an emergency fund or savings to cover any unexpected costs can be a life saver in these situations. Not only do these provide a safety net but if you don’t end up using them, they can go towards big purchases involved in the purchase like new furniture or hiring movers.

Structuring your lending with little market analysis.

If the interest rate trends over the last five years have taught us anything, it’s that we can never quite predict what’s going to happen next. This can make for structuring your home loan tricky. We recommend researching what NZ economists are saying about interest rates along with speaking to your mortgage advisor to make an educated decision on how to best mitigate any risk.

Example: Some people had previously fixed their home loan for 3-5 years while the interest rates have been high. Now that they are falling, they are stuck with this high interest rate or would face large break fees to change their lending.

We hope you found some valuable tips to take into your next home purchase. For more information on the home buying process, get in touch with one of our mortgage advisors for a free, no obligation chat.

We look forward to hearing from you,

Fiona & Amy