One of the biggest financial journey Australians take – buying a home for the first time! With home affordability on the decline, by the time homeownership becomes a reality, many realize there’s a lot they just don’t know.

As the saying goes, “you don’t know what you don’t know”. That said, in the first year of becoming homeowners, everything to do with property ownership can feel like baptism by fire, especially if thinks aren’t going to plan.

Yes, you’ll be able to ask a few people questions here and there. Truth is though, there’s just a lot that first time buyers will need to go through & experience firsthand to really get what property ownership means.

So, let’s look at some common mistake first home buyers make. 

Projects

Buying their home as a project and then having the urge to do all the required improvements all at once. What’s the problem, you ask?

The problem with this idea, it leaves new owners “house rich and money poor”.  When buying a renovator, it’s best to prioritise what’s required to make your new home comfortable.

This could be as simple as replacing all the carpet in the bedrooms with new bamboo flooring or renovating the bathrooms.

Remember, prioritise, take an honest & intense assessment of the condition of your home, think what you need to do in your home versus what you want to do in your home, and what that means realistically time and money commitment wise. 

Finances

Many first home buyers discover their financial limitations when they apply for a home loan. Unfortunately, once you become a home owner, it won’t get any better if you buy a house you cannot afford.

For starters, no one talks about what things cost as a home owner! Sure, the listing agent will tell you what the council rates are and if it’s a strata property, what the body corporate levy will be.

But for a home owner to fix any issues or make improvement to the property, unless you’re a handyman/ person, it comes with a price tag.

Get a new aircon system, replace the hot water tank, build a new front fence after some random does a hit and run – having not likely experienced these types of issues as a renter, the new home owner doesn’t have any idea how much it would cost to fix.

The problem this presents for the first home buyers is the inability to budget accordingly. Which potentially leads them to take on high interest rate personal loans to cover any unexpected home repair expenses.

Another issue, which is more common to home buyers building their first home instead of buying from existing stock, interest rates associated with construction loans can be one percent, if not more, greater than the standard purchase loans. And this rate gets carried over to the new loan once the construction is complete.

Mistake first home builders make is not seeking to find a better home loan on completion of their build. First home builders should find out if they have the potential to refinance within the first three months of moving into the completed house.

Expectations

Ok, you bought a house. Like you bought a frigging house! And that’s a pretty good accomplishment on its own.

The goal should be to build on what you’ll learn in the first year and setting realistic expectations for the coming years. Ideally, your experience should enable you to,

1. If renovating, set realistic & attainable project goals, with improvements undertaken bite-sized task at a time. Unless, of course your financials allow you to complete the project all at one 

2. Establish an overall household budget that allows you to build an emergency funds reserve to dip into rather than needing to apply for an expensive personal loan

3. Unless your home loan is managed by the loansHub rate review platform, assess your home loan regularly. Yes, it’s time consuming, it could also save your thousands of dollars.

Finally, a gentle reminder, don’t forget to congratulate yourself for managing to buy your first property and enjoy your home.  

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This article does not constitute advice; readers should seek independent and personalised counsel from an appropriate trusted adviser that specialises in property, a tax accountant and property or interior design specialist.