Biggest Mistake First Home Buyers Make

3rd June 2024

Finance & Budgeting Pre-Construction First Home Buyer

This article explores the biggest mistake first home buyers make - overstretching their budget - and provides practical advice on how to avoid it. It encourages buyers to think like investors, start small, and take advantage of government incentives.

Biggest Mistake First Home Buyers Make

Introduction

Buying your first home is an exciting milestone, but it can also be a challenging process. Many first home buyers fall into common traps that can hinder their financial future. In this episode of the Home Building Hub podcast, hosts Colin Bischof and Darren Brennan discuss the biggest mistake first home buyers make and how to avoid it. If you're looking to enter the property market, this episode is a must-listen!

The Biggest Mistake First Home Buyers Make

The most common mistake first home buyers make is overstretching their budget. Instead of purchasing a property they can comfortably afford, many buyers aim for a bigger home on a larger block in a premium location-often beyond their means. This mistake can delay their ability to build equity and upgrade in the future.

Why Is This a Problem?

• Buying beyond your budget can lead to financial stress.
• Overcapitalising on unnecessary upgrades reduces future resale value.
• Holding out to save for a bigger home can mean missing out on current market opportunities.
• Delaying your purchase could result in losing access to government incentives available now.

A Smarter Approach: Thinking Like an Investor

Instead of treating your first home as your "forever home," consider it an investment into your financial future. Investors focus on affordability, rental yield, and growth potential. Applying this mindset as a first home buyer can help you:

• Get into the market sooner.
• Build equity faster.
• Position yourself for a future upgrade.

Steps to Take

1. Speak to a Mortgage Broker First

2. • Find a broker who specialises in construction loans for first home buyers.

   • Understand your borrowing capacity before looking at homes.

   • Consider a package at least $50,000 under your borrowing limit to allow for financial flexibility.

3. Set Realistic Expectations

4. • Avoid unnecessary upgrades such as the highest ceilings, high-end flooring, or expensive facades.

   • Focus on essential features that add long-term value, not luxury items.

   • Consider a smaller home to get started.

5. Keep It Simple

6. • Standard inclusions are often enough-avoid high-end finishes.

   • Consider a turnkey home and land package to avoid extra costs for landscaping, blinds, and fencing.

   • Stick to the essentials: a well-located, affordable property that meets your needs.

7. Use Government Incentives

8. • There are grants and stamp duty exemptions available for first home buyers.

   • A good broker will help you maximise these incentives.

9. Think Long-Term

10. • Your first home is not your forever home.

    • Plan for an upgrade in a few years by focusing on building equity.

    • Choose a property that will appeal to future first home buyers when it’s time to sell.

Key Takeaways

• Biggest mistake: First home buyers often overstretch their budget for a larger home in a premium location.
• Better strategy: Think like an investor-buy what you can afford, build equity, and upgrade later.
• Start small: Consider smaller homes or smaller blocks to enter the market sooner.
• Government incentives: Take advantage of first home buyer grants and stamp duty exemptions.
• Simplify the process: Consider turnkey packages to minimise post-purchase expenses.

FAQs

Should I build a large home if I can stretch my budget?

Not necessarily. Overcapitalising on your first home can slow your ability to build equity and upgrade in the future.

What’s a turnkey package?

A turnkey home and land package includes everything needed to move in-blinds, landscaping, fencing, and appliances-reducing extra post-purchase expenses.

How can I maximise government incentives?

Speak to a mortgage broker who specialises in construction loans and first home buyer grants. They’ll guide you on what’s available and how to apply.

Listen to the Full Episode

For a deeper dive into this topic, listen to the full episode here: Biggest Mistake First Home Buyers Make.

About the Home Building Hub Podcast

The Home Building Hub podcast, hosted by industry experts Colin Bischof and Darren Brennan, is Australia’s premier resource for new home buyers. With weekly episodes featuring special guests, the podcast provides objective, high-quality insights into the home building process-completely free and without sales pitches. From understanding financing options to navigating the complexities of building a new home, each episode is packed with actionable advice and tips.

Explore more episodes at www.homebuildinghub.com.au and join our growing community of informed home buyers.

Disclaimer

Whilst we’re all about providing value to you, this article should not be considered as legal or financial advice. It contains general information only and is based on the content discussed during the podcast episode. This information is relevant to the episode’s release date and may not be applicable at the time of reading. Always seek independent professional advice tailored to your personal situation before making any legal or financial decisions.