This is a guest post written by Jessica Davis.
Years, potentially decades, of savings and you’ve achieved the dream of owning your own home. You are on cloud nine and you can’t wait to reenact that scene from Risky Business in the privacy of your own home. We encourage new home owners to celebrate this exciting time, however it is important to be aware of this big new role you have taken on as a home owner. This important life stage means new obligations and responsibilities that are important to stay on top of.
Therefore, we decided to list what we believe are the top 5 common mistakes made by first home buyers and equip them with the information they need to avoid stumbling at any homeowner hurdles.
Here are our top 5 common mistakes made by first home buyers:
1. Missing repayments
After the cost of interiors, moving and renovations it can be common for new home owners to lose their grip on their finances. It feels like overnight their balance in their savings account just dropped. If this is the case for you, and you suspect you won’t meet your next repayment, call your lender and discuss options with them immediately. Responsible lenders should work with you to find solutions, but it is important to get in there early.
To avoid any future repayment mishaps, we recommend setting up automatic transfers from your bank accounts, so you do not miss a repayment. We also suggest having reminders in your calendar before the repayment date to make sure you have the necessary funds available. Ensuring you have a firm grasp on your finances should be your number one priority.
2. Forgetting costs of essentials
Many home owners don’t account for some of those additional costs involved in the purchase of a new home. This can leave many out of pocket and under budget, so make sure you do your research and factor in every expense when planning your finances.
Potential additional costs to be aware of include:
- Property taxes
- Legal fees
- Contents insurance
- Maintenance work
“When finding the right home loan for our borrowers we always run through additional expenses they may face, such as inspections, home or contents insurance and maintenance work. Factoring in these essentials allows borrowers to get a more transparent and realistic view of their finances, so they don’t find themselves in unplanned debt.” – Michael Clement, Mobile Lender at Greater Bank
3. Overspending on interiors
You walk into Ikea with hungry eyes, everything seems reasonable, but when it’s added up at checkout your jaw hits the floor. You’ve been saving for so long, of course you want to dress your house to impress. You can still put your mark on it and make it yours with quality pieces with a few cost-cutting solutions.
Here are our top 4 approaches to saving on interiors:
- Upcycle with used interior pieces
- Grab a deal on Gumtree, Carousell or Facebook Marketplace
- Hold off and benefit from sales
- Skip the brand names and go for function over fashion
4. Choosing the wrong providers
Choosing the right providers can be tricky. Do your research and see what deals different telecom and energy providers can offer. A provider could offer a deal on a landline, mobile, internet and cable package, while another provider might lower their prices if you are just wanting one of these services. Have those awkward conversations with your electricity provider to avoid losing out. Try and negotiate and speak to different providers to get the most hassle-free and affordable service.
5. Dipping into the emergency fund
Never sacrifice your emergency fund. Maybe you are eager to repay your mortgage in larger chunks, or maybe you want to splash out on a vintage Hamptons style dresser, whatever the justification do not dip into your emergency fund. It shouldn’t come as a surprise that emergency funds are meant for emergencies. If you were to lose your job tomorrow (knock on wood) it is important to have three months’ salary in a savings account to help you through this transition period – especially now you have mortgage repayments to meet.
Being aware of these 5 mistakes new home owners (unfortunately) make allows you to arm yourself with the tools you need to minimise any risks of unnecessary trouble. This valuable information should ease your mind, so you can spend more time relaxing and enjoying your brand-new casa!
Jessica is a freelance copywriter who has written extensively for numerous reputable financial institutions and real estate companies.
TFC Disclaimer: Guest posts are posted in good faith. I cannot attest to the accuracy and originality of each article. If you have any concerns about the content, please contact the author of the article outlined above.