Overcoming Your Property Fears
Whether you are keen to buy your first home or looking to buy an investment property, there are many fears that get in the way and stop people from proceeding. It’s not surprising though, given that this is probably the largest purchase that you are likely to make and it’s only natural to fear the worst as it’s a massive decision. Just remember, you are not alone.
To help you win back your confidence and get you over the line to owning your first home we have come up with our Top 3 fears that we believe stop people from buying a property and helpful hints to overcome these obstacles once and for all.
Fear 1 – Buyer’s Remorse
Have you ever bought something and then regretted it moments after, thinking that you’ve made the wrong choice? Maybe it was a dress that you tried on, thought it looked good in the shops, but as soon as you tried it on at home you had your doubts and contemplated taking it back to exchange it with another dress you saw.
This is known as Buyer’s Remorse, basically the fear of making the wrong choice. In property terms, you are worried that you are buying the wrong home and this can be because of a number of factors including being indecisive and not knowing what you really want, and wondering whether you really want to be in such a large amount of debt. By doing some detailed research on the property, suburb and demographics this should help confirm whether this property is a worthwhile investment.
However, it is best to ensure that this property is also within your price range so it does not put a strain on your finances and add another fear, the fear of not being able to afford the mortgage repayments. There are always plenty more new homes coming on the market so you don’t need to feel pressurised into making a decision when you are not comfortable.
You can also make a list with two columns. One side has your must haves and the other includes your nice to haves. This will help the decision making process far easier as it gives you a clearer picture of what you are looking for.
Fear 2 – Unable to Afford Mortgage Repayments
This is another fear that plays on people’s minds when they are looking to buy a property. What if there comes a point down the line when you can’t afford to pay the mortgage due to a loss of a rental tenant, interest rate rises that increases your monthly repayments, or perhaps you find yourself out of work?
In order to calm this fear, you should have an emergency fund set aside to take care of these types of situations and have a plan already in place with budget details and what your monthly expenditure is.
It is also a good idea to take out health insurance before buying a house as unexpected medical costs can cause financial instability. If you are concerned about interest rate rises, then you might prefer to take out a fixed mortgage loan so you know exactly how much you are repaying every month.
Fear 3 – Property Value Declines
One of your biggest fears might be to do with how the market will act and that your home actually doesn’t make a profit and instead declines in value. This could be due to a suburb becoming less attractive and appealing to home buyers in the future as there may be unpleasant developments close by including a busy highway, or a landfill site.
It is sometimes difficult to know what the future might bring, but you can take the time to do your homework and contact the local government to find out what future development plans are proposed in the suburb you are looking to buy in. Buying in a suburb that is already well established with good schools, transport links and low crimes is always a good place to start.
You should also take into account the property cycle. All regions go through a property cycle which occurs every 8 – 10 years. The best time to sell is when prices are rapidly rising (around 11 – 12 o’clock) and you can expect prices to fall around 6 o’clock, but every 10 years it is generally the case that property prices double in value so a $400,000 is likely to be worth $800,000 in 10 years time. Therefore, it is worth holding onto the property if possible and riding out the wave.
By doing your research properly on your chosen suburb, educating yourself about property investing whilst knowing your borrowing capacity, this will all help to reduce your fears and hopefully get you back on that property ladder.
Published on 20th of October 2014 by Marty Stanowich