There are many different forms of investment but few are as exciting as picking up the keys to your first home. Owning your own home is one of the most intimate and accessible forms of investment, and (with caveats) it’s also a pretty stable one.
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Buying your first property is fairly unique as it straddles the line between being a labor of love (because this is a place to live and make a home), and being a financial exercise.
Even if you plan to live in your home for a long time, you still need to go into a prospective purchase with the market in mind.
First time buyers have to wear two very different hats at the same time, and reconciling your nesting instinct with shrewd financial sense can be a tough balancing act.
By avoiding these stumbling blocks, you can find yourself on your way to happy and profitable home ownership!
Don’t fall in love with a property you can’t afford
A lot of people tend to shop with their heart, gravitating towards properties at the top end of their budget… And they’re often hopelessly optimistic when it comes to managing their monthly finances. As the subprime mortgage fiasco taught us, what the bank says you can borrow doesn’t always tally with what you can afford to borrow.
Make sure you factor in all your additional monthly commitments and debts on top of your potential mortgage payments.
Make sure your expectations are realistic
Many of us wait decades before being able to move into a property that ticks every single box on our wishlist. While, of course, it’s important to find a place that you’d be happy to call home you may find yourself needing to make some concessions as a first time buyer. Ask yourself if you really need that extra bedroom or if you can stand to wait a few months to make some improvements and renovations before your housewarming party.
Don’t go it alone
When first getting into the property market it’s easy to feel like a lamb amidst wolves, but don’t be afraid to ask for help and advice. Your first port of call should be to develop a relationship with a local real estate broker, who will be ethically obliged to act in your best interests as well as in those of the seller (although as your agent their loyalty will be to you).
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Know the property
None of us can predict the future. So, however much you may be in love at first sight with a property, failing to do your due diligence is one of the most egregious errors you can make. Avoid finding yourself stuck in a money pit by researching the property’s value relative to the surrounding properties in the area. How has its value risen previously? Can you make any improvements or renovations that will add value or will you be at the whims of the market?
Finally, make sure you get a surveyor to assess the shape of the property before you commit.