Avoid these common first home loan traps
Helpful hints on purchasing your first property.
Perth is arguably one of the most expensive places to live due to increased construction costs and the average price of living. We are quickly a becoming a generation of renters. Whether it’s six months or a three-year lease, Perth is saying yes to investment properties whilst home ownership is slowing down. If you are looking to make the leap and buy your first place, Margaret Spaseski from Perth’s Alpha Omega Financial Solutions has given us her list of the biggest mistakes first home buyers make and told us how you can make an informed decision when it comes to putting down roots.
Look outside the traditional areas
Perth has its defining north, east, south and western suburbs - places where you may have lived during your childhood and university years. Unfortunately, Perth’s metropolitan area is no longer considered affordable and the outer suburbs are developing into quite competitive locations to live. Margaret explained how investors should be looking towards regional and out of Perth areas as this is where purchase prices fall within the acceptable loan limits. “First home buyers and investors are heading towards the regional and out of Perth areas with new estates offering all the schools, shopping and parks.” Basically, you can have all the comforts of city living without the price tag or traffic!
Don’t over capitalise on property
Don’t be fooled by the bells and whistles Margaret warned, reminding home buyers to consider the additional costs all those extra comforts can have. Ultimately, adding too many extras to the mortgage could negatively affect the sale price, and no home owner wants that! Margaret’s tip is to think of a first home or investment as the beginning of a journey that comfortably suits your circumstances. You don’t want to have a budget blowout early on, just in case the market takes a turn for the worst with interest rate rises or lack of tenants.
NOTE: Don’t be swayed by builder promotions. If you’ve been tossing up whether to apply for a New Home Builders Grant, listen up! Margaret provided a little industry insight and highlighted how these deals are designed for people who know very little about construction and should be carefully scrutinised before signing. Margaret’s analogy is simple: this is the biggest purchase of your life; you’d look at it a bit harder if it were on a shelf in a shop with a 40% off tag. That’s when you’d ask “what’s the catch?”
Don’t shop for what you want to live in
Just as you don’t go shopping when you’re hungry, you shouldn’t be house hunting when all you can see is yourself in the front yard. You need to take a step back and look at it from an investors point of view. “At the end of the day, the property will probably never be seen by the owners again after settling except for rental updates,” pointed out Margaret. Clear your mind of the great parties you could be having in the stunning backyard and put yourself in the mind of a tenant. Would they have time to up-keep all that lawn? An investment property needs to be an informed decision based on the potential for growth and rentability. Take the location and amenities into consideration - who will my tenants be and what will they be looking for?
Ready to write a check?
Home ownership is one of the biggest investments you’ll ever make, so make sure you seek the help of a professional before you take the plunge. You can find Alpha Omega Financial Solutions on Facebook, as they offer options for first home buyers and investors, with access to over 27 lenders who are able to offer the products suitable for your needs.
They are able to talk you through just what property you can afford, and with the current market, you may be surprised with what you can get.