9 First-time buyer mistakes and how to avoid them

It doesn't matter what the market conditions are like when you start your home buying journey. Favourable market conditions don’t mitigate the potential pitfalls and, unfortunately, buyer’s remorse is not uncommon amongst first-time buyers, usually as a result of neglecting to do their homework and ensure they are thoroughly prepared.

It really is a case of ‘forewarned is forearmed’ because if you have a clear understanding of the process and what is required and have devised a clear plan of action, you can easily circumvent costly mistakes and shop for your dream home with confidence.

Now more than ever, it’s essential to have experienced property professionals to guide you, especially if you are a first-time buyer.

It is critical for first-time buyers to be aware of what boxes need to be ticked to make a wise investment choice and evade the pitfalls - here are some of the common mistakes that can be avoided by doing proper research and planning. 

Not having a clear idea of what you want

You might have an idea of the type of home you would like to live in, but there are many other factors you also need to take into account that will have an impact on your daily life - there is no use in loving the home but hating the neighbourhood as eventually you will start to hate your home. 

Would you prefer to live in a peaceful, suburban area or a vibrant environment with nightlife? Do you need to be close to work or schools or would you prefer to be in close proximity to a social entertainment hub? Do you have time to take care of a garden or would a lower maintenance option suit your lifestyle better?

Not being sure of what you can afford

Most first-time buyers will be required to pay a deposit and apply for a bond for the balance, and unless you have an idea of how much banks are willing to lend you, you are literally shooting in the dark.

The best way to do this is by obtaining pre-qualification which not only affords you the peace of mind that your credit record is in good standing, it also arms you with the knowledge of how much you can afford to spend and the type of bond you can expect from a bank.

Get pre-qualified and start out your journey with the best footing

Buying more house than you can afford

It’s easy to be tempted to buy a home that might stretch your budget, but overextending yourself is never a good idea as you risk losing your home if the unexpected happens and you fall on tough financial times. You’ll also have less wiggle room in your monthly budget for other bills and expenses.

More here on how much house you can afford

Moving too fast

Buying a home can be complex and rushing the process can cost you later on as you may not be able to save enough for a deposit and the associated costs, address items on your credit rating or make informed decisions.

Take the time to map out your home-buying timeline well in advance - at least a year, if possible, bearing in mind how long you will need to save money, repair poor credit, and so on before you can apply for pre-approval.

Not making an effort to clear debt before applying for a home loan

The two most critical requirements are a good credit record with a track record of repaying contractual debt responsibly and being able to afford the monthly bond instalment.

One of the key factors that banks take into consideration when determining affordability is an applicant’s income-to-debt ratio, so it’s advisable to start reducing debt as soon as they even start to think about buying a home.

Not shopping around for the best rate

Many people think that just because they have banked with one institution for a number of years, they will automatically get a better interest rate than from any other institution.

However, this is not the case and buyers should bear in mind that shopping for a mortgage is like shopping for a car - it pays to compare offers.

One of the best ways to do so is to utilise the services of a bond originator like ooba to source the best financing option. They don’t charge for the service and their access to multiple lenders, enables them to negotiate on your behalf and to obtain the best deal, thereby saving the homebuyer thousands of Rands in interest over the term of the bond.

MyProperty Home Loans can help you apply to all the major banks to ensure you get the best deal

Allowing their emotions to influence decisions

Buying a house is a major life milestone; you are choosing the place where you’ll put down roots, make memories and create a space that’s truly yours, so it’s easy to get too caught up and make emotional decisions.

It’s important to remember that you’re also making one of the largest investments of your life, and a bad decision could have repercussions for years to come.

Paying a deposit that's too small

You don't always have to make a 20% down payment to buy a home but paying too small a deposit is one of the most common regrets amongst first-time buyers who misjudged the importance of smaller monthly bond repayments down the line.

Emptying your savings and underestimating the running costs of a home

Unless you are buying a brand new home off-plan, you will most likely have to do unexpected repairs not too long after you have bought your house and you could quickly find yourself in a financial hole if you have drained all your savings to buy the property.

You may also use more electricity than in your previous home and will have other monthly bills like rates and home insurance.

Being prepared will not only minimise the stress of the process, it will allow you to save money from the get-go and will minimise the possibility of ending up with a mountain of unforeseen debt.