What Not to Do When Buying Your First Home in Dubbo

Buying your first home in Dubbo is an exciting milestone, but it's also a journey where mistakes can be costly. Many first home buyers in the region make avoidable errors that can impact their financial wellbeing for years to come. Understanding what not to do is just as important as knowing the right steps to take.

At Simple Lending, we've helped countless first home buyers in Dubbo navigate the property market successfully. This article highlights the most common mistakes and how you can avoid them when buying your first home.

Not Understanding Your Budget Before You Start

One of the biggest mistakes first home buyers make is looking at properties before establishing a realistic first home buyer budget. Getting caught up in the excitement of open homes without knowing what you can actually afford leads to disappointment and wasted time.

Before you begin your property search, you need to:

• Calculate your genuine borrowing capacity, including all income and expenses
• Factor in upfront costs like stamp duty, legal fees, and building inspections
• Consider ongoing costs such as rates, insurance, and maintenance
• Account for Lenders Mortgage Insurance (LMI) if you're borrowing more than 80% of the property value
• Research available first home buyer grants and first home buyer stamp duty concessions in NSW

Working with a mortgage broker can help you understand your borrowing capacity and identify suitable Home Loan options for your circumstances.

Skipping Pre-Approval

Many first home buyers start attending auctions or making offers without securing pre-approval for their first home loan. This is a critical mistake that can result in missed opportunities or, worse, entering into contracts you cannot fulfil.

Getting pre-approval before you seriously start house hunting provides several advantages:

1. You'll know exactly how much you can borrow
2. Sellers and real estate agents take you more seriously
3. You can act quickly when you find the right property
4. You'll identify any issues with your first home loan application early

Pre-approval gives you confidence and credibility in what can be a highly competitive market. Learn more about getting loan pre-approval and how it strengthens your position.

Failing to Research Government Schemes and Incentives

Dubbo falls under regional NSW, which means first home buyers may be eligible for specific government assistance programs. Not researching these schemes means you could miss out on thousands of dollars in savings or support.

Key programs to investigate include:

• Regional First Home Buyer Guarantee: This scheme allows eligible first home buyers to purchase a home with a 5% deposit without paying LMI
• First Home Loan Deposit Scheme: Helps you enter the market sooner with low deposit options
• First Home Owner Grants (FHOG): Available in NSW for new homes or those being substantially renovated
• First Home Super Saver Scheme: Allows you to save for your deposit through your superannuation fund
• First home buyer stamp duty concessions: Can significantly reduce your upfront costs

The Home Guarantee Scheme in NSW can be particularly beneficial for buyers in regional areas like Dubbo. Understanding your first home buyer eligibility for these programs is essential.

Not Comparing Interest Rates and Loan Features

Accepting the first home loan offer you receive without shopping around is a costly mistake. Interest rates, even when they differ by just a fraction of a percentage point, can cost you tens of thousands of dollars over the life of your loan.

When comparing loans, consider:

• Fixed interest rate vs variable interest rate: Each has advantages depending on your circumstances and risk tolerance
• Interest rate discounts: Many lenders offer discounts for specific professions or when you meet certain criteria
• Offset account: Can help you save significantly on interest by offsetting your savings against your loan balance
• Redraw facility: Allows you access to extra repayments you've made
• Loan features: Such as the ability to make extra repayments without penalty

A mortgage broker can help you compare different Home Loan options and find the most suitable loan structure for your needs. Don't just focus on the interest rate - the overall loan package matters.

Borrowing Your Maximum Capacity

Just because a lender approves you for a certain amount doesn't mean you should borrow it all. Many first home buyers stretch themselves to their absolute limit, leaving no buffer for unexpected expenses or changes in circumstances.

When determining how much to borrow, consider:

• What happens if interest rates rise?
• Can you still afford repayments if one income is temporarily lost?
• Do you have emergency savings separate from your deposit?
• Will you have funds left for furniture, moving costs, and immediate repairs?

Leaving yourself some financial breathing room means you'll sleep better at night and be better positioned to handle life's unexpected events.

Overlooking Additional Costs

First home buyers often focus solely on the purchase price and deposit, forgetting about the numerous other costs involved in buying a home. This oversight can leave you financially strained before you even move in.

Additional costs to budget for include:

• Stamp duty: Even with concessions, this can be substantial
• Lenders Mortgage Insurance (LMI): Required if borrowing more than 80% (though some schemes help avoid this)
• Building and pest inspections: Essential for identifying potential problems
• Conveyancing and legal fees: For the transfer of property ownership
• Loan establishment fees: Charged by some lenders
• Moving costs: Removalists, utilities connection, mail redirection
• Immediate property expenses: Council rates, strata fees, insurance

Creating a comprehensive first home buyer checklist that includes all these costs helps prevent financial surprises.

Not Getting Professional Advice

Trying to navigate the home loan application process alone is unnecessary and risky. The mortgage industry is complex, with numerous products, lenders, and criteria that change regularly.

Benefits of working with a mortgage broker include:

1. Access to multiple lenders and products, not just one bank's offerings
2. Expert knowledge of first home buyer eligibility criteria and government schemes
3. Assistance with paperwork and documentation
4. Negotiation of better interest rates and terms
5. Support throughout the entire process, from application to settlement

For first home buyers in Dubbo, working with a local broker who understands the regional market can be particularly valuable. Explore our services for first home buyers in Dubbo, NSW.

Choosing the Wrong Deposit Amount

Deciding how much deposit to save is a strategic decision. While a 20% deposit avoids LMI, waiting to save this amount might not always be the optimal choice, particularly in a rising market.

Consider these deposit options:

• 5% deposit: Available through government guarantee schemes for eligible buyers
• 10% deposit: Balances market entry with manageable LMI costs
• 20% deposit: Avoids LMI but may delay your purchase
• Gift deposit: Some lenders accept genuine gifts from family members

Each approach has implications for your Home Loan application, so understanding low deposit options and their trade-offs is important.

Ignoring Your Credit History

Your credit score significantly impacts your ability to apply for a home loan and the interest rate you'll be offered. Many first home buyers don't check their credit report until they're ready to apply, only to discover problems that could have been addressed earlier.

To protect your credit score:

• Check your credit report for errors and dispute any inaccuracies
• Avoid making multiple credit applications in a short period
• Pay all bills and existing debts on time
• Reduce credit card limits and close unused accounts
• Register on the electoral roll at your current address

If you have credit issues, speak with a mortgage broker early - they can advise on strategies to improve your situation before you formally apply for your first Home Loan.

Not Thinking Long-Term

Falling in love with a property without considering how it fits your future needs is a common mistake. While your first home doesn't need to be your forever home, thinking about the next 5-10 years helps ensure you make a sound investment.

Questions to ask yourself:

• Does the property accommodate potential family growth?
• Is it located near employment opportunities?
• What are the local schools like if you plan to have children?
• Will the property be suitable as an investment if you move?
• Is the area experiencing growth that may increase property values?

Buying a home in Dubbo offers regional lifestyle benefits and generally more affordable property prices than metropolitan areas, but ensuring the property suits your longer-term plans is essential.

Moving Forward With Confidence

Avoiding these common first home buyer mistakes puts you in a stronger position to successfully purchase your first property in Dubbo. By understanding your budget, researching government assistance, comparing Home Loan options carefully, and seeking professional guidance, you'll make more informed decisions throughout the process.

At Simple Lending, we specialise in helping first home buyers navigate the complexities of home loan applications and finding suitable loan structures for their unique circumstances. Our team understands the specific opportunities available to buyers in regional NSW and can help you access government schemes like the Regional First Home Buyer Guarantee.

Ready to start your first home buying journey the right way? Call one of our team or book an appointment at a time that works for you. We'll help you create a comprehensive plan, identify suitable Home Loan options, and support you every step of the way to home ownership.