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As a First Time Buyer, it can be easy to make a mistake when looking for your mortgage. They are very complicated, full of jargon and after all, you’ve never done it before! How are you to know? Where do you start? And how the heck do you avoid them?!

We’ve created an easy list of The Most Popular First Time Buyer Mistakes in 2020 and how to avoid them. After all, like Warren Buffet wisely says; ‘It’s good to learn from your own mistakes. It's better to learn from other people's mistakes.’

Number 1. Falling for a home before finding out how much money you can borrow. 

Mistake: One of the biggest mistakes first time buyers make when looking for their first home is unrealistic expectations. Yes looking at you Mrs. Pinterest, Mr. PropertyPal, Little Miss Property News. What are you doing looking at home before you know how much you can afford?! 

I’ve been there, so don’t worry you’re not alone. While this is harmless in the short-term, and a fun way to pass the time, in the long-term it can actually cause frustration, disappointment and confusion for First Time Buyers. 

Solution: Know your affordability. It’s best practise to get an ‘agreement in principle’ or a ‘mortgage in principle’ from your mortgage broker beforehand. This is a statement from a lender saying that they'll lend a certain amount to you before you've finalised the purchase of your home. Meaning, you’ll know what you can afford and search for! 

Alternatively, if you’re just browsing and not ready to speak to a broker just yet. You could use a simple mortgage calculator to set yourself a more realistic expectation of your affordability. 

Number 2. Thinking that you don’t need credit, and not checking your credit score.

Having a good credit score is the new flex for First Time Buyers. 

Mistake: First of all don’t avoid credit altogether. It’s not bad or risky, so long as you keep up your repayments. In fact, having credit actually proves you are responsible and trustworthy of lending to. (I know because I used to think that credit was the devil and learnt the hard way that I in fact needed it.) 

Mistake: First time home buyers, like us, have made the mistake of not checking their credit score before applying for a mortgage. A Mortgage Brokers nightmare.

This has two effects:

  1. You are unaware of any errors on your credit record which could have been fixed before applying
  2. Your overall credit score is negatively affected because your application is rejected due to the errors on your record

It’s like trying to capture lightning in a bottle. If you make a mistake it’ll only hurt your application. 

Solution: Check your credit score! If you have checked your credit score as a first time buyer, well done! You’ve managed to avoid one of the most popular mistakes when going for a mortgage. If you haven’t yet, get on it right away! You can check your credit reporting here

Remember that rejected applications are counted against your credit score negatively, so avoid this if possible. 

Number 3. Misjudging the time it takes to get an approved mortgage.

As it is, there’s no time frame that can truly tell the length of time it takes to get an approved mortgage. (You could say, “The limit does not exist.”

Mistake: You don’t get a mortgage the same day that you speak to your advisor for the time.

Studies show that first time home buyers could be waiting around ‘18-40’ days to get a mortgage offer after submitting your application. It should be expected that it will take longer than this to agree upon the right deal for you. 

Solution: So with this in mind, you should make a start on your mortgage application as soon as possible before you make any property offers. Find Ways to Improve Your Mortgage Chances

If it feels like it’s taking longer than expected, mortgage brokers are there to help and advise, so keep communicating with them. 

Number 4. Insufficient Property Research

Mistake: More often than not, first time buyers make the mistake of deciding they like a property based on one or two features. Yes, you may love that Victorian/Edwardian Era house - but are you able to pay for its maintenance? What is the location like? What age group are your neighbours? Are you worried about noise and traffic?

Solution: What we’ve found is that you really need to do a deep dive into the area of the property before you commit 100%. Pick out your priorities e.g. schools, transport, grassland, gyms, friends, family and get yourself registered with a good estate agent. 

Some things to consider: 

  • Older houses require upkeep for them to remain safe (think copper pipes, heating systems, cracked tiled floors etc.

  • Location. The property may only be a five minute bicycle ride to your daily train station stop, but the path may also be a shortcut to the local club scene, running weekly 2-4-1 nights! (Bonus for some...)

  • Friends and Family. Who do you want to live nearby? 

  • Are you going to own a pet, are there dog walks nearby? 

  • Double glazing, gas, oil, rates… all the fun stuff.

An estate agent will take some of the leg work in sourcing property options for you although their help isn’t essential if you would rather do it yourself. Just make sure you really commit to your research if this is the case. Think outside of the box. 

Number 5. Worrying about ‘silly questions’.

First time home buyers worry about asking daft questions. When in reality (and realty) there isn’t really such a thing. We’ve spoken to many mortgage brokers about their ideal buyer, and you know what? They love hand holding and helping, it makes them feel good and happy at the end of the day. 

Mistake: It is better to have asked the question and gotten an answer than to not ask and never know - at any stage of the mortgage process. If you don’t ask, you don’t get. Especially before viewing a property. 

Solution: Write up a list of questions in advance that are important to you as a first time buyer and would sway your opinion on the property or mortgage deal.

You don’t want to leave a nice property and on the way home think “did that house have any wardrobe space? What were the washing facilities? Was there a back garden? What about car parking?” (No really, this happens.)

I actually viewed an apartment pre-covid and it wasn’t until I got back into my car and the viewing agent had left, that I realised I forgot to check out the bathroom and shower (and I’m still not even sure if it had one to be honest…). I believe now I was underprepared and flustered. Which is why I didn’t think to ask! And the agent was happy for me to leave without showing me around. 

Viewing properties is overwhelming and stressful, especially your first time home. It’s natural that you’d like to commit to the first one which meets your requirements. But do make sure you check for the essentials, make a list and stick to it.

Tip: If the property has been on the market for a while, the sellers may be open to accepting less than asking price. 

No question is silly! So make sure you’re prepared with a whole whack of some. It can also help to bring someone with you, who can provide a valued second opinion (and remind you to look in the dark corners and for the wash room!) 

Extra Tips! 

  • Get registered on electoral roll if you haven’t already as this is a quick way to verify your identity and will make property searching easier.
  • Calculate your savings potential as you go. 
  • Maximise your deposit savings account to an account with a high interest earring rate.
  • Do try to visit homes in person if it is safe to do so. Drive through the areas at different times of the day e.g rush hour and late night. Just make sure to avoid any pot holes!

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