Purchasing property, whether it’s for you to live in or for investment purposes, can make an excellent financial asset for any Australian.
Of course, buying property is a huge financial obligation, which is why it’s vital to be proactive in avoiding some of the most common, and costly, mistakes that are often associated with purchasing property.
To help borrowers stay on the right track, here are three potential pitfalls to consider when buying property.
1. Failure to complete proper pest and building inspections
A common mistake a home buyer can make is not getting the proper pest and building inspections carried out prior to buying a property. Without the proper inspections, you’re at risk of finding out you’ve bought a lemon down the line. Imagine finding out you have major roofing issues during a storm. Suddenly the building report cost looks attractive compared to the cost of having the repairs carried out. The same with termites or any pest issue.
With so much competition for property, it’s not surprising that an increasing number of potential buyers are failing to get the necessary inspections done before purchasing. Given that comprehensive pest and building inspections can cost a significant amount of money, many potential buyers choose to forego them altogether as they’re concerned they’ll end up spending a motza completing inspections on properties that they don’t end up buying. This can be particularly true if the property is going to auction.
That said, some real estate agencies offer pest and building reports at a discounted price, so it could be worthwhile making enquiries to see if the financial burden can be reduced.
2. Low property valuation
It’s not uncommon to hear about property valuations coming in lower than expected at the moment. The reality is, the market is going through some ups and downs and property valuers are, understandably, cautious. When valuations come in lower than expected, property buyers need to be able to stump up more money from their own hip pocket to complete the purchase, which can cause problems.
3. Buying an off the plan property in a bad market
Another property pitfall affecting some buyers at present are the changes to investment lending policy. Over the last few months, many of Australia’s lenders have made sweeping changes to their lending policies. While the vast majority of policy changes have been targeted at investors, there have been some more general changes made which apply to all buyers. These changes include (but aren’t limited to) modifications to servicing criteria as well as loan to value ratio (LVR) restrictions and interest rate increases.
As such, investors and home buyers who are in the process of purchasing off the plan properties may find that while they received a pre-approval from their lender when they started the process, that lender has recently changed their lending policy and will no longer be able to approve the loan because they have reduced their maximum LVR. While this issue certainly won’t affect all buyers purchasing off the plan, those going through the process should consult their lending professional.
As your specialist Hunter Valley & Maitland Mortgage Broker I’m here to help you achieve your financial goals and simplify the lending process. For advice on how to avoid these and other pitfalls, or any other loan related query you may have, call Mike on 0435 945 419.