Buying a house is one of the biggest financial commitments you will ever make. With summer drawing to a close and the financial hangover of Christmas behind us, this time of year is when most house hunting takes place.  Here are a few tips if you are buying a property.

BEFORE YOU START LOOKING

Do a budget

Fail to plan, plan to fail.  Plenty buy homes without any really savings plan and subsequently do things tough.   If you are upgrading your house, make sure you forecast a realistic sale price on your old place.

Save 20%

You should have a minimum 20% deposit to create a buffer should you lose your job, if interest rates rise or you start a family.  You will also avoid mortgage insurance!

Secure pre-approval

Getting pre-qualified for a loan is one of the first things you should do. Make sure that it is in writing, particularly before you bid at auction.  There is nothing more frustrating than having a lender say no to your dreams.  Before you apply get rid of any personal loans and credit cards.

DURING THE HOUSE HUNT

Do your homework

Failing to research the housing market is a rookie mistake.  Do not rely on the agent's listing price as a guide as they are acting for the seller.  Look at lots of properties.  Get historical sales reports and ask for land rates and building insurance notices to ascertain the true value. 

Look at external factors

Yes it may look like your dream home but what about the neighbours? The traffic? The lack of parking?  Or how about the noise from the nearby industrial park?  Or worse, the aircraft noise every five minutes? Do you work night shift and need to sleep during the day?

MAKING AN OFFER

Don't let emotion take over

Are you an impulse buyer?  Yes purchasing a home is very emotional, but there is too much at stake financially if you get too attached and go over your budget.  Set some ground rules beforehand attending auctions. 

Don't stretch yourself

It is better to buy a smaller house and live a comfortable life with regular family holidays than have a huge house and not being able to enjoy it because you have to work overtime and weekends just to meet repayments.

Don't buy just to get in the game

If you plan on selling the house within a few years then don't buy it in the first place.  Stamp duty, agent's commission, legal fees, mortgage insurance and loan charges can result in $50,000 going down the drain.  Property is a long-term investment.

BEFORE YOU SIGN

Inspect it

Many properties have been purchased only for them to be riddled with termites.  If you don't get an independent pest and building inspection report done prior to exchanging contracts then you are running the risk and it could cost you thousands in the future.

ON SETTLEMENT

Enjoy the unpacking by getting yourself a nice bottle of champagne to celebrate your new purchase!