Buying your first home is an important decision. Most people tend to focus on things like location, cost, appreciation, etc, but ignore some other important factors. Here we will be listing out most common mistakes made by first time buyers.
This is one of the most commonly made mistakes in real estate. Most young people today tend to buy a property in the first year of their job. They get excited and decide to buy a home not analyzing the need for it. It’s always safe to wait for 1-2 years in your job and then take a huge decision like buying a home.
People generally buy a home for two purposes namely; for self occupation or as an investment. If you are planning to buy a home as an investment, then it’s sensible to wait for the right time. Like equity markets, real estate pricing also goes through cycles of ups and downs. The basic mistake is to buy a home when the real estate prices are sky rocketing. The ideal time is to buy when the prices are down.
Not considering renting
Renting seems to be a better option compared to buying a property in some cases. Some possible cases are
- when your job nature requires lot of traveling
- When you are transferred from one city to city another regularly
- If you are planning to relocate to another city/country in near future.
These are just some of the use cases, where renting is a better option, but people make the mistake of buying a property and then end up in selling it at throw away prices.
Not opting for housing loan
Whether you’re buying a property for self occupation or renting it out, getting the help of a bank is a sensible thing to do. Most people, who can afford the housing cost, tend to buy the house with cash lying in their bank. This is a bad financial decision. Most investment experts’ advice is to opt for housing loan at the time of purchase. This gives you with ample liquidity and also helps in saving taxes.
Spending too much on interior
This is easily the most frequently made mistakes by first time buyers. At the time of purchase, people never take into account the cost of interiors for the house. They just consider the amount quoted by the seller and ignore the interior cost in decision making. It is extremely crucial to budget for the interior and it can cost upto 10-20% of the total house cost. One has to be sensible and frugal in deciding the interior. If you’re a first time buyer, then taking the advice of your friends’ /relatives is a good idea. Don’t spend too much stuff like floor tiles, doors, furnishings, etc unless you can afford.
Not getting insured
Unfortunately home insurance is still in its infancy in India. Government has not made it mandatory and so people have not understood the importance of it. We take pain to insure our health, car and two-wheelers which cost less than 10 lakhs. We spend 10 times more money in a home but ignore the insurance part.
We have listed only the most frequently made mistakes. Each and every person tends to make different kind of mistakes, so it’s always better to get expert advice before buying your first home