New Home Hurdles: 6 Common Problems New Home Buyers Experience in Australia

Whether you’re looking for a local builder in Ocean Grove or hoping to buy an existing house in Cairns, there’s a set collection of problems you’re likely to face along the way. If you’re not prepared for them, these problems can escalate into costly catastrophes, so it’s worth wrapping your head around them before you start house hunting. 

With that said, let’s take a look at the six most common hurdles new home buyers face in Australia. 

1. Striking the right balance with your deposit

It’s tempting to start house hunting the moment you have the minimum required deposit for a home loan. However, if you do this, you’ll drastically limit your potential. The problem is, with inflation on the rise, the amount you need to save is also increasing. To strike the right balance, many Australians are either moving in with friends or living with their parents to maximise the amount they can put into their savings. 

2. Overextending on your home loan

This is a mistake many Australians only realised they made when inflation started taking hold in 2023. As interest rates climbed, many new homeowners discovered that they were over-leveraged, with no wiggle room to allow for increases in their mortgage payments. 

To avoid this issue, it’s crucial to build up the largest deposit you can realistically manage. The next essential step is to avoid taking out the maximum loan you can afford. Doing so will give you no leeway for fluctuating interest rates. Instead, work out a range within which you’ll be able to afford the repayments if interest rates increase, and take out a loan that places you comfortably within this range. 

3. Poor credit

Many young Australians only discover how important their credit score is when they apply for a home loan. Not only will your credit score influence whether you’ll get approved, but it will also affect the amount a bank is willing to lend you and the interest rate they’re willing to offer. So, use services like Experian to get a free credit history check, and then take action to improve your score before applying for a home loan. 

4. Deceptive real estate agents

Of course, not all real estate agents are unscrupulous sharks. However, many deploy deceptive practices to lure buyers in, especially if it’s your first home and you lack experience. For example, we’ve heard numerous reports of first-home buyers visiting a house with their parents and having their parents pretend to be an unrelated couple. Later, the real estate agent will call and claim that the “other couple” are “very interested” and have made a higher offer. Such stories demonstrate the tactics real estate agents sometimes use to drive urgency and push up the price of a home. 

5. Underestimating the associated costs

A new home will cost you more than just the closing price. Indeed, the total amount you end up paying can be significantly higher once you factor in appraisal costs, loan establishment fees, mortgage insurance, property taxes, and other miscellaneous fees.

6. Failing to consider all aspects of a property

You probably know that you need to have the property inspected for things like termite damage, mould, and other structural issues. However, there are many more features of a home that need to be considered. What are the neighbours like? How noisy is the area? What are the local building codes? What impact might the wildlife have on your experience there?  

Prepare for these potential pitfalls, and you’ll be well-placed to find or build the home of your dreams.