Purchasing your first home can be an exciting and emotional experience. Make sure you avoid any pangs of buyer regret by following these nine steps.

1. Get home-loan pre-approval – and keep in contact with your lender

Before you even start looking at properties, get pre-approval from your lender. This will not only give you confidence that you’re looking at the right type of properties but it will enable you to act quickly when you find ‘the one’.

Make sure, however, that you keep in regular contact with your lender or mortgage broker.

“Most pre-approvals only last 90 days,” says Wendy Brown, Head of Broker Home Loans at Macquarie’s Banking and Financial Services Group.

“Revisit your pre-approval every three months with your lender or broker. Circumstances change, lending criteria changes. So, if you go to auction and buy a home based on pre-approval you got nine months ago, you could find yourself in trouble.”

2. Understand the true cost of purchasing a home

Of course, it’s not as straightforward as a $50,000 deposit plus a $500,000 home loan equals a $550,000 property. There are many other costs to consider, including the cost of home inspection reports, lenders mortgage insurance (LMI), solicitor's fees and stamp duty.

Make sure you’re across all of the additional costs that come with a home purchase, and factor them in.

3. Purchase within your comfort zone

Buying your first home should be a happy experience, not one that leaves you racked with doubts and resentment. First-home buyers who stick to their budget are less likely to suffer from regret.

The best way to avoid overextending is to have a firm grasp on your current incomings and outgoings. If you know exactly where your money goes each month before you buy, you will be in a much better position to plan an affordable repayment strategy.

When it comes time to make an offer, never go above your budgeted purchase price. You never know what might happen in the future that could put a strain on your finances.

4. Understand why you’re buying

It may sound obvious, but getting clarity on why you’re buying and what your goal is – is critically important.

“It’s important to have a conversation about why you’re buying a property, and what you envisage doing with it, over what period of time,” says Brown.

“Think very clearly about what you have the capacity to borrow, and the lifestyle you want.”

Brown suggests making a list of everything you want in a property and the surrounding area - that way you can remain clear and objective when viewing properties.

5. Look beyond the property

It can be hard not to let emotions get the better of you when inspecting a property you like. Some people immediately begin picturing themselves living there, maybe with their future children, family and friends.

The tendency to get too far ahead and caught up with the aesthetics of a property often distracts people from considering other essential points.

Savvy buyers think beyond the home. What is the local council like and how do their services measure up? How has the suburb been trending in the past few years? How is the home positioned and what are the neighbours like? Are their good schools nearby? Is there adequate public transport? Are there infrastructure or building development plans near the property?

6. Get a property inspection...

A building inspection is a worthwhile investment for a number of reasons. Aside from its ability to bring potential problems to light, building and pest inspections can also be used to negotiate on the purchase price.

We've all heard horror stories of buyers discovering structural faults, water or pest damage after spending their whole budget on purchasing the home. If you can get a third party to identify any issues before you purchase, you will have much more bargaining power with the seller.

7. ...and test appliances

As well as a building inspection report, it’s a smart move to check that the appliances installed in the house actually work – and aren’t on the verge of breakdown.

From hot water tanks to ovens, dishwashers to wiring – the more you know about the property, the greater your negotiating power.

8. Take advantage of first home owner concessions

The First Home Owner Grant is a government initiative to assist people in buying their first home in Australia and can save you thousands in duties and fees. If you’re eligible for any financial assistance, make sure you claim it!

9. Be pragmatic

Some people let their emotions override their common sense when it comes to purchasing a house. It’s vital to stay pragmatic. “Some people buy because they're worried they'll never get that opportunity again,” says Wendy Brown. “Or, they fall in love with a beautiful kitchen. Falling in love with one aspect of a house could override 10 things that aren't right about it.

“That's where having that list of what you're trying to achieve helps. Yes, the property may have a nice kitchen, but that doesn't mean you can live without a car park. Take the time to write down what you can and can’t compromise on, before you start house hunting and make sure you stick to your guns.”

Key takeaways

  • Get your home loan pre-approved, and stay in regular contact with your lender or broker. Remember, pre-approval usually lasts 90 days.
  • Understand there’s a lot of additional costs when purchasing a home.
  • Don’t overextend yourself – buy within your comfort zone.
  • Identify what you can and can’t compromise on in a home before you start looking.
  • When you’ve found a place you like, get a building and pest inspection done and check all appliances.
  • Scrutinise the suburb, too.
  • Explore first-home owner concessions.
  • Remain pragmatic and level-headed.

To make your first home-buying experience as smooth as possible, talk to a Macquarie home loan specialist on 13 62 27.

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Additional information

Unless stated otherwise, this information has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502 and does not take into account your objectives, financial situation or needs. You should consider whether it is appropriate for you. All applications are subject to Macquarie's standard credit approval criteria.