Top 5 Mistakes New Home Buyers Make

3rd February 2025

Finance & Budgeting Pre-Construction First Home Buyer Investor Upsizing & Downsizing

Buying a new home is exciting, but many home buyers fall into common traps that can cost them time, money, and stress. In this episode, we break down the Top 5 Mistakes New Home Buyers Make—and how to avoid them.

Top 5 Mistakes New Home Buyers Make

Buying a new home is an exciting journey, but it comes with potential pitfalls. In this episode of the Home Building Hub podcast, hosts Colin Bischof and Darren Brennan highlight the top five mistakes new home buyers make—and how to avoid them. If you’re planning to build a home, this episode is a must-listen!

1. Shopping Before Getting Finance Advice

One of the biggest mistakes buyers make is falling in love with a home or block of land before knowing their budget. Without finance advice, you risk disappointment and unexpected costs.

• Why it’s a mistake: You may not be able to afford the home you’ve chosen.
• Key issues:

• • Overlooking stamp duty, mortgage insurance, conveyancing fees, and connection costs.

  • Assuming all lenders will approve the same amount—different lenders have different criteria.

  • Failing to get pre-approval before shopping, which can lead to wasted time and missed opportunities.

• Solution:

• • Speak to a mortgage broker first to understand borrowing capacity, government schemes, and different loan options.

  • Obtain a pre-approval (or at least a "capacity letter/email") to ensure you have a clear budget before starting your search.

  • Compare multiple lenders to secure the best interest rate and terms.

2. Taking Advice from "Uncle Gary"

Every family has an "Uncle Gary"—a well-meaning relative or friend who offers advice on home building despite lacking up-to-date knowledge.

• Why it’s a mistake:

• • Advice is often outdated or based on hearsay.

  • It can lead to fear-driven decisions that may not be in your best interest.

• Solution:

• • It's important to still listen to friends and family, but we're just saying don't let their advice make the decision for you. Do your own homework, make your own decision, and choose who YOU think is best for you.

  • Seek expert advice from builders, land developers, and finance professionals.

  • Listen to reliable resources (like this podcast!) rather than relying solely on family and friends.

  • Use case studies or real-life examples from trusted professionals to make informed decisions.

3. Buying Land Without Speaking to a Builder

Buying a block of land before consulting a builder can cause serious issues.

• Why it’s a mistake:

• • The block may not be suitable for your preferred house design.

  • Site costs could be significantly higher than expected.

• Key issues:

• • New building regulations may require expensive modifications.

  • Land orientation impacts energy efficiency and liveability.

  • Poor lot selection can lead to setbacks in planning and construction.

  • Site conditions (rocky soil, high slope) can lead to unexpected costs in site preparation.

• Solution:

• • Always consult a builder before purchasing land to ensure compatibility with your chosen home design.

  • Research soil conditions and site costs before making a purchase decision.

4. Unrealistic Expectations: Perception vs. Reality

Many buyers fall into the trap of wanting a luxury home on a limited budget.

• Why it’s a mistake:

• • Display homes showcase premium features that may not be included in standard packages.

  • Upgrades can quickly push costs beyond budget.

  • Some upgrades, like high-end worktops or lighting fixtures, can be added later for better cost efficiency.

• Solution:

• • Create a clear needs vs. wants list.

  • Prioritise essential features.

  • Understand what is included in your home package to avoid surprises.

  • Consider future-proofing—choose elements that allow for easy modifications later.

5. Choosing the Cheapest Builder

Going with the cheapest builder might seem like a win, but it often leads to regrets.

• Why it’s a mistake:

• • Cheap builds can compromise quality, inclusions, and service.

  • No builder has a magic wand... if you pay less to them, they have less to pay to the suppliers and trades who build your home.

• Key issues:

• • Limited standard inclusions may force expensive upgrades.

  • Cheap contracts might exclude key elements like rock removal or site preparation.

  • Inferior materials and craftsmanship could affect durability and resale value.

  • Cheap builders might cut corners on unseen but crucial aspects.

• Solution:

• • Compare builders based on value, not just price. Look beyond the initial quote and consider long-term quality and costs. £10k-£15k will barely impact your repayments, so choose the right builder, not the cheapest one.

  • Visit completed projects or read builder reviews to assess work quality and customer experience.

Key Takeaways

• Get finance advice first and obtain pre-approval before house hunting.
• Rely on expert guidance rather than informal opinions.
• Consult a builder before buying land to avoid costly mistakes.
• Be realistic about your budget and distinguish needs from wants.
• Choose a builder based on value, not just price.
• Budget for additional costs like connection fees, insurance, and maintenance.

For the full discussion, listen to the episode here: Top 5 Mistakes New Home Buyers Make.

Glossary of Terms

• Pre-Approval: A lender's conditional agreement to provide a home loan based on initial financial checks.
• Stamp Duty: A government tax applied to property purchases.
• Lenders Mortgage Insurance (LMI): A fee lenders charge if your deposit is below 20%.
• Site Costs: Additional expenses for preparing land for construction.
• Orientation: The positioning of a home to maximise natural light and energy efficiency.
• Inclusions: Standard features provided by the builder included within their base price.

Frequently Asked Questions (FAQ)

Q: How do I know how much I can borrow for my new home?

A: Speak with a mortgage broker who can assess your income, expenses, and available home loan options. Obtaining pre-approval can also give you a clear budget before shopping.

Q: Can I buy land first and find a builder later?

A: Of course you can, but we recommend speaking with a builder's consultant first to ensure the land is suitable - as they can review the price, site conditions, estate requirements, orientation and much more.

Q: Are display homes a good representation of what I will get?

A: Not always. Display homes mostly feature premium upgrades. Always ask what is included in the base price and plan for necessary upgrades. Also ask "When people purchase this home, what do they normally spend on average?"

Q: Why shouldn’t I choose the cheapest builder?

A: The cheapest builder may cut costs on materials, service, or quality, leading to hidden expenses later. Always compare inclusions and reputation.