While renting a property has certain advantages, such as the flexibility to move around, buying a home provides the purchaser with an appreciating asset that they can call their own. However, purchasing a property is also a far bigger commitment that requires careful consideration.
It is vital to do the required research before making the final decision to purchase a property. Although it is an extremely rewarding endeavour, it is a long-term commitment that should be given the necessary time and deliberation it deserves.
Here are a few aspects that every first-time homebuyer should consider when starting the process of purchasing a property:
Calculate the cost
It is important to remember that the monthly bond repayment is only one aspect when determining how much you can afford. Affording a home means also being able to pay for the other recurring monthly costs involved in owning and maintaining a property.
It is imperative to select a home that meets your budget regarding what the full living costs will be and not just the bond repayment. Additional costs to consider would include utilities, rates and taxes, levies and maintenance costs. These are not costs that are considered by the bank when approving finance, so it is important to discuss and calculate these costs with an experienced real estate agent or a bond originator such as Betterbond.
Put fundamentals first
Even if the first property that you buy doesn’t have any luxury features, it is important that all the fundamentals are in good repair. A list of defects should be provided by the seller, but it is still worthwhile to thoroughly inspect the property for any hidden defects. If there is anything that you are unsure of, get a professional contractor to inspect the property and provide a snag report.
Is there potential for growth or change?
Ideally, it is best to find a property that both fits your current needs but has the potential to be changed to meet your developing requirements. While there is no sure-fire way of knowing what you will require in five years’ time, it is good to have an idea and consider what possible life changes could occur over that period. It might include a marriage or possibly a new baby – provisions should be made for these milestones.
A home’s potential to grow does not only relate to its size, but also its potential to increase in value. While a home is a place to live, it is also an investment – so it makes sense that it has the potential to appreciate in value. Following the basic principles of home buying will give you the best chance at a good return on investment. These principles include buying in a good location, as well as checking area statistics and figures to ensure the home is purchased at a fair market value.
All elements have a lifespan
Apart from the home’s current defects, it is also important to assess what features will need attention in the near future. Although the home’s features may be in good repair, everything has a lifespan and will require upkeep or repairs at some stage. Look at the condition of features such as the roof and flooring and try and ascertain how long it will be until these elements need to be replaced. Researching the expected remaining lifespan on large-ticket items can help you financially plan for the future.
It might not be perfect, but it’s the right home
There is a good chance that the first home you purchase is not going to be perfect, but it is vital that it is the right home for you. Have a list of priorities, as well as those items that are nice-to-have but can be compromised.
Purchasing a property is an investment that could affect your financial well-being for the rest of your life. For this reason, the decision requires far more homework than renting. To ensure that the correct decision is made, you should take the time to weigh up all the available options.