Published at: 6/21/2016 3:29:01 PM
Everyone loves a budget-priced property especially first home buyers. But not every bargain spells savings.
We look at three circumstances when a ‘cheap’ property could be anything but.
1. It’s a renovator’s delight
Here’s a familiar scenario. The ad screams ‘Renovate or detonate!’ and you reckon you’ve got what it takes to pull off a major renovation and bag yourself a champagne home for a beer price. Time for a reality check.
Talk to any seasoned renovator and they’re likely to point out that major home improvements don’t come cheap. Worse still, renovations have a habit of going well over budget. Unless you have some serious cash behind you or you’re a tradie yourself, anything more than a ‘paint and pretty up’ could be a major cash drain.
Take off the rose coloured glasses and ask a trusted builder for a ballpark idea of what’s it’s going to cost to bring the place up to scratch. If he reaches for smelling salts or declares the place an uninhabitable wreck, scratch the home off your list.
2. Right home. Wrong location.
When it comes to real estate, properties are almost always cheap for a reason.
If it’s not the building itself, it could be the area that’s dragging values down. Look for the obvious – a high rate of local crime or unemployment, proximity to flight paths, or lack of decent public transport and other amenities.
If there are no obvious clues, dig a little deeper. Some blocks of land may be classified as flood prone making it almost impossible to secure affordable home building insurance. Next!
3. Settling for an overpriced home loan
You’re probably wearing out plenty of shoe leather finding the right home. But are you investing time checking out home loans to see which offers the best deal?
Your choice of loan is just as important as the property you select - the two go hand-in-hand. And it pays to track down a competitive rate. Snaring a rate saving of just 0.5% can slash tens of thousands of dollars off the overall cost of your loan.
Don’t just settle for a great rate. Check out the loan fees too. These can be tucked away in the fine print so use the comparison rate for an apple-for-apples view of different loans.
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