Make your property dreams a reality

With mortgage rates sitting at around five per cent, buying your first home might not be as unaffordable as you think. But don’t fall into the trap of treating your first home as a temporary option. It might not be your forever home, but it pays to avoid these mistakes with your first investment.

Don’t be precious

I’m always running into clients who tell me they wish they’d bought a property they’d seen, but it felt too early, says Torsten Kasper, managing director of property management group Chisholm & Gamon.

“Then a year and a half later, I’m still seeing them. What’s happened is that they could have afforded it, but it felt too easy.”

The answer? Don’t wait around for that dream home.

“If you can focus on doing that preliminary hard work in the first six to eight weeks, you can minimise your chances of falling into the trap of thinking something better will come up. Homes talk to people, so if you can afford it, it’s in the right area and it’s comfortable, then jump at it. 

Plan for the medium term…

Capital city house prices rose almost eight per cent last year, a result of construction slowing down. According to the Domain Group’s State of the Market Report for Autumn 2015, it is predicted that capital city median house prices will rise five per cent over 2015. While this is positive for home buyers looking to make a profit on the sale of their current home, property market growth can change year after year, so it pays to be cautious.

“Given fluctuations in the market, it’s wise to think of your first home purchase as a medium term option,” says Kasper.

“You need to assume you’re not going to be updating for four to five years. Your personal circumstances and the market can change” 

… but don’t deprioritise mortgage repayments

While there are a few reasons why not paying off your mortgage straight away is a good idea, you can also take years off that mortgage timeline by making those extra repayments.

“If you can pay your mortgage off as quickly as you can, you can always revert back, get a reverse loan or mortgage if you need some extra equity for a different need,” says Kasper.

“Then you can make sure you have enough equity to start to work on the deposit for the next property purchase.”

Don’t watch too many home renovation shows

It’s easy to feel inspired by prime time TV, but renovating isn’t always as straightforward or as fun as it looks.

“It might look like they’re doing a simple bathroom renovation on TV, but by removing the tiles, you might realise there [are] issues with the plumbing,” says Kasper.

“Just plan for the worst and have an extra budget within your budget for the unexpected.” 

Always check your contract

It pays in the long run to get a solicitor or settlement agent to double-check your contract. Not only will it provide some clarity over simple rules, such as owning pets, but could improve your quality of living. Make sure you check the zoning, the settlement date and that fittings and fixtures are in working order.

“You also need to check for things like permits for large buildings next door, because you don’t know what the impact might be for your own living situation,” advises Kasper.

Regardless of how long you plan to stay in your first home, buying your first property takes careful planning. Checking house prices is just the start. Make sure you chat to your real estate agent, so you can try and avoid taking unnecessary risks.