For many years, as property prices in many areas across Australia kept rising – so did the fear of missing out (FOMO) of getting a foot in the property market. However, with property prices easing off, we’re now entering a state of fear of over-paying (FOOP).
This newfound fear is also contributing to fence-sitting. Should you go for it, should you wait? It’s hard to know what you should do in this current market and whether to wait for something better around the corner.
The latest NAB Property Sentiment Survey found that respondents are more hesitant to get into the property market than previously1.
Believe us, we know how you feel. After many potential years of not having the opportunity, you want to make sure you’re now getting a great deal, not just buying for the sake of it being more affordable.
Before we get into some tips and tricks to help ease your FOOP (hehe), here are just some things to keep in mind that could contribute to a more expensive home buying journey than you first expected.
- Choosing a mortgage that’s not right for you. Just because a certain lender allows you to borrow a higher amount than you first thought you could, doesn’t mean you should take it.
- Going beyond your budget. Stretching your home buying budget isn’t just a one off cost. Consider the repayments and value of the property over time to know if this is going to become a costly error.
- Letting your emotions get the better of you. Whether you’ve found a home you’ve fallen for or just exhausted from all the open homes that you’ve dived into a purchase too quickly.
- Underestimating the total costs of buying a home. Not knowing the hidden costs of buying a home and not budgeting for the unexpected expenses.
Now, let’s get de-FOOPing? Yeah, we’ll go with that…
- Understand what the property is really worth. Knowing how much the place is worth compared to others in the area is a great start. However, taking it one step further to finding what buyers paid for similar homes is better. You’ll have an understanding for whether you’re paying an appropriate amount.
- Know that’s happening in the market. Do your research on the areas that you’re interested in buying. Are they areas for potential growth? Have the property prices dropped significantly? Understand the land value and overall housing market for a better idea of whether it’s worth the purchase.
- Get pest and building inspections done. You don’t want to move in to your new home, only to discover you’re now roommates with termites or other pests. You also don’t want to wake up one day to find your bathtub in your lounge room either. These inspections are crucial to know whether you’re in for expensive repairs.
- Don’t go to extremes if you think you’ve found your dream home. There are a lot of emotions involved when purchasing a home, especially if it’s your first. Just because you’ve fallen head over heels for the place, doesn’t mean it should exceed your budget.
It’s a great idea to speak to an expert to ensure you have the right home loan in place before you start your home hunting. It’s a great way to understand your budget and help avoid overpaying in the long run.