Things You Should Know Before Buying A House
Buying a house can be a worrisome activity, whether you're a first home buyer or an experienced investor. Use our tips below and you'll be in a much better position when buying a home.
In addition to this article, you should find out all the terms you'll need to know when you start your house hunting journey, check out our First Home Buyers Glossary.
Work Out All The Additional Costs Of Buying A House
There are many different things you may have to pay for that some people forget to budget into their repayments. Not only will they add extra expense they may also have to be paid upfront. Some of the main costs are:
- Mortgage Application Fee
This can be a big expense, some lenders charge over $700 to apply for loans, some have no cost. You can check the fees some lenders charge on our Home Loan Comparison Page.
- Valuation Fee
Lenders sometimes charge a fee to value the property you want to purchase.
- Legal Fees
From the bank, the real estate agent and/or the conveyancers you hire.
- Stamp Duty
Often the biggest expense, apart from the actual purchase price of the house. It can add tens of thousands or even more to the price of the property. There are sometimes concessions available for pensioners or first home buyers, see them in our Stamp Duty Guide.
- Early Repayment Fee
You might think you're doing the bank a favour by paying your loan off early or making extra repayments, this isn't the case. Check whether you will be charged a fee to do this, or if you are even allowed to do this at all before you sign up for a home loan.
- Pest & Building Inspections
Though not always technically required, you would be taking a big risk if you didn't get these inspections carried out before you purchase a property.
- Removalist Costs
This is one of the most commonly forgot about cost of buying a new house. Buyers are caught up with all the excitement of living in their new home and thinking of where they will place their furniture, but then forget that they actually have to get their furniture there first.
- House Repairs
Buying a 'renovator's dream home'? Make sure you know exactly what it will cost to carry out said renovations, before you purchase the house. To get quotes from tradespeople, our sister site GimmeQuotes helps you get free quotes from many kinds of tradespeople you need. The GimmeQuotes site also has conveyancers and removalists, so you can get free quotes for many services you need, all in one spot.
- New Furniture
Upgrading to a house with more bedrooms? The new lounge room to big for you're current television? You might need to buy new furniture for the new house, this can be costly. Try and look for what you will need before you move in to your house, so you're not rushing and thus missing out on getting the best value for your money when you purchase new furnishings.
Consider How Much You're Borrowing
Juts because the bank will lend you a certain amount of money, it doesn't mean you have to borrow it all. It might be tempting to buy a bigger, more expensive house because the bank has offered you a loan larger than you're expecting. If you don'r feel comfortable with the repayments, then reconsider how much you're borrowing.
Work out what the monthly repayments will be on the different amounts you think you might like to borrow, and think about how your life would be with a variety of loan options.
A good idea to avoid temptation, is to set a budget and don't go looking at houses that are even 'just a little bit' over your budget. Temptation can be hard not to give in to when you see a dream home - even if it is out of your comfort budget zone.
Meet The Neighbours
Unlike the real estate agents or the seller of the home, neighbours often have no vested interest in the sale of the home. They are your best chance of getting an honest opinion about the area, or even any history of problems the homeowners have had with the house you want to buy. Don't just go to the house next door, they might be either friends of the seller or they really want to get rid of them, so they could be somewhat biased. Go a little further up the street as well.
While you're there you can also check out their house. How clean is their yard? Do they have any noisy animals? How about noisy cars or motorbikes that will be revving up at all hours of the night? Do they look like party animals? Drug dealers? Gangsters? Finding this information out early can help you avoid any unwanted living conditions in the future.
Take A Tour Of The Neighbourhood
Location, Location, Location. This is stressed by the real estate industry, and there is good reason. Once you buy a home, you can't move it to another suburb. But if you buy in a nice suburb, you can always change the house.
Don't just drive around the area, walk around, this way you can speak to some of the locals, find out if they are friendly, and ask them what there is to do around town.
While you're walking, keep an eye out for some not so obvious signs. Look at the cars, are they clean & well mainitained or are they falling apart? Walk into some shops, see if they are trendy enough for you. Look for graffitti, rubbish, 'needle warning' signs, etc.
You could even walk in to the local police station and ask their opinion on the town, hopefully they won't be too busy to have a chat.
What Is Planned For The Area?
The local council's website will have a section devoted to future plans for the area. Find out if any new bus stations, train stations, shopping centres or schools are going in, this could all add value to your property. You can also check for any negative plans that may be going ahead, such as high rises blocking your newly purchased sea views.
Make Sure The Property Isn't In A 'Disaster Zone'
In a valley or near a river? Check the area isn't a flood risk zone. Out bush? Check the area isn't a bushfire danger zone. How about that beachside paradise? Check the area isn't at risk of erosion or subsidence.
All these risks may add to your insurance costs, if you will be able to be insured at all. It could be worth getting some insurance quotes before you purchase a property to make sure you know what you'll be in for.
Interrogate The Real Estate Agent
There are some important questions you should ask the real estate agent.
Lookout for signs of worry when they answer your questions, this will give you the real answer, rather than the prepared one.
Some important questions may be:
- How long has the property been on the market?
- How many viewings and offers has the property had?
- Why are the vendors moving?
- How old is the house?
- Have there been renovations done?
- Has it been replumbed? Rewired? Sprayed for pests?
- How long has the seller lived in the house?
- What is included in the sale? Appliances? Curtains? Light fixtures?
- Has anyone ever been murdered in the house?
(Not just because ghosts are scary, but also because this can decrease the value of the home)
- How much are the council rates?
- Have there been any disputes with the neighbours?
Refresh Your Utility Expenses
Moving into a new home is the perfect time to find better deals for your utility bills. Instead of just transferring everything from your old house to your new, or simply sticking with the same company, shop around. Phone companies, electricity companies and gas companies are always making new deals and offers, and usually they improve on older deals.
Check for home phone deals, internet provider deals, electricity providers, gas providers, and anything else you will have to set up for the new house.
As well as looking for better prices, find out what special offers they have. Also call up your old provider and tell them you're thinking of switching, they will usually go as far as they can to make sure they don't lose you as a customer.
Come Back To The House At Different Times Of The Day
If the viewing is in the middle of the day, most of the neighbours will be working. This means you won't know how noisy they are, you should view the house again after work hours, then you will know whether or not the nextdoor neighbour is a budding drummer or big time heavy metal fan.
Now you have considered all our tips, good luck in finding that perfect home for you! To find a home loan that may suit you, visit our Home Loan Comparison Page.