First-Time Home Buyer: Avoid These Mistakes

Are you thinking of purchasing your first home? As a first-time home buyer in India, it’s natural to feel excited. However, have you thoroughly considered all the details before making this purchase? One moment, you’re picturing your ideal living room, and the next, you find yourself stuck on the paperwork that seems perplexing. 

The truth is, most first-time buyers don’t mess up because they’re careless; they mess up because no one tells them what to watch out for. That’s where we come in to help you avoid such blunders. This blog will guide you in avoiding first-time home buyer mistakes and making the most important decisions of your life simpler and clearer. So, you won’t experience a mess-up due to a lack of guidance on what to watch out for.

Skipping the Budget Talk and Falling for the Dream Home

It’s easy to fall for a home that somehow seems a little out of reach. It can be due to a stunning balcony, a sleek kitchen, or that one extra room you never thought you needed until now. And when the bank says you’re approved, it’s tempting to go for it. But here’s the truth. Just because a lender gives you the green light doesn’t mean it fits your life. Many first-time buyers overlook the real expenses, such as bills, repairs, daily costs, and emergency expenses. Start with a budget that’s grounded in your lifestyle, not just your loan approval. That one step can save you years of stress.

Not Getting Pre-Approved Before House Hunting

Browsing through listings and envisioning oneself in various homes can be an enthralling experience. However, being a first-time home buyer searching for a home without pre-approval is like riding a bike without brakes. Many individuals have made this mistake, thinking they could obtain approval after finding the perfect property. In truth, sellers and agents take you seriously only when you have a pre-approval letter ready. This not only clarifies the maximum amount you can borrow but also offers a financial viewpoint when making an offer. It sets your limits and expectations accurately from the outset.

Overlooking Additional Costs Beyond the Down Payment

Saving a deposit for the house we want to buy is a sensible idea. However, there are additional costs to consider, such as registration fees, stamp duty, home loan processing fees, insurance, and moving expenses. As first-time home buyers, we often overlook these costs, which can accumulate faster than we anticipate. This transforms our celebration into a source of stress. 

In India, additional costs usually range between 7% and 10% of the property’s value. For example, if you are buying an apartment worth ₹50 lakh, you should be ready to spend an extra ₹3.5 lakh to ₹5 lakh on related charges alone.

Here is a simple breakdown of common additional costs in India:

Ignoring the Importance of a Home Inspection

Finding a home that is within your budget and fulfils all your desires may elevate your spirits. The question here is, have you thoroughly inspected your potential home? Neglecting this can turn your dreams to dust. Numerous issues, such as plumbing leaks, electrical faults, structural cracks, or pest problems, often accompany resale properties. These problems are not always visible at first glance, but can cost you lakhs to rectify later.  According to the data, a 2,000 sq. ft. home can have an average of 130 defects or snags. If each snag costs around ₹1,000 to fix, homeowners could spend approximately ₹1.3 lakhs on repairs. Investing ₹5,000 to ₹15,000 in a professional inspection now may save you lakhs in the long run. It’s a small price to pay for peace of mind. 

Draining Savings for the Down Payment

We usually save money that can help us out in difficult situations, or to buy something, and we have waited a long time to get it. We will stake all our savings to make a down payment. The same goes in the case of buying a new house. This can help reduce the mortgage burden by saving on interest payments, but it leaves you financially exposed. Emergency funds are one of the necessary things that can save you from a disastrous phase. These emergency funds should last at least 3-6 months. 

The government is not sitting back when it comes to helping first-time homebuyers. Schemes like Pradhan Mantri Awas Yojana (PMAY) and the Credit Linked Subsidy Scheme (CLSS) can help reduce the interest you pay on your home loan. That means you could save a good amount over time. Additionally, some banks offer special deals for individuals purchasing their first home. These include lower interest rates, easier rules, or more time to repay the loan. It’s a good idea to check out these offers. They can make buying your first home easier and save you money, too. 

Ignoring Resale Value

You’ve likely heard the phrase “Location makes a lot of difference”, but resale value also deserves consideration. While you might be purchasing a home for yourself now, life often takes unexpected turns. What if you need to relocate for your job or simply wish for a different environment later on? A location close to quality schools, convenient transportation, shopping, and healthcare facilities is likely to attract potential buyers in the future. Additionally, the builder’s reputation is crucial when you eventually decide to hang that “For Sale” sign. 

Additionally, as a first-time home buyer, stay informed about developments in the neighbourhood. The new metro line or airport terminal could significantly increase property values. Even if your investment is long-term, a little foresight can greatly safeguard your investment.

Don’t Allow Your Heart to Break the Bank

Going for a house that is way too expensive for your budget is like ordering a Starbucks with a budget of a roadside tea. The house can be attractive, but it can send you to the verge of bankruptcy. No home is worth the anxiety. As a first-time home buyer set your highest-price threshold and stick to it, including not only the mortgage but also utilities, upkeep, and life’s unexpected expenses. Be patient here. Continue surfing until you land on a spot that clicks and falls comfortably within your budget. Your future self, who doesn’t want to have to choose between gas and groceries, will be grateful. 

Rushing the Decision

With the busy property market, there tends to be pressure to act quickly. Nevertheless, making swift decisions can have negative consequences. Take your time, carefully consider all the information, and make comparisons between various properties before finally settling on your preferred one. Don’t be swayed by external forces, such as peer pressure, market trends, or a pushy seller, into making a decision hastily.

If it doesn’t feel right, whether it’s an unreasonable seller, missing paperwork, or issues with the property, don’t hesitate to walk away. There will be more opportunities down the road, and spending the time to seek out the right property will be worth it in the long run.

Think Ten Years Ahead

Your initial home isn’t a one-time affair; it must evolve with you. Having space for a future family, a home office, or even a room to entertain friends can be the difference between an “adorable starter pad” and “I’m trapped here.” Consider how your requirements may change, such as the presence of children, animals, and telecommuting, and select a location that can accommodate these factors. 

Bonus: Those same features tend to increase resale value when you do decide to relocate.

Conclusion

Buying your first home is one of the most significant decisions you will make in your life. It can be overwhelming, but don’t let yourself get trapped into something that doesn’t look good. Breathe in and breathe out. Consider all the circumstances and take all the necessary measures, even if it means spending more time and effort. Consult with the best agencies and individuals, visit the sites, take the time to thoroughly review a deal, cross-check all legalities, and follow all necessary steps. Then ask yourself, “Have I taken care of everything?” Only after that, go for a deal. At last, you will be at the right place where you are meant to be.

Frequently Asked Questions