Top five risks of buying property
Superannuation | 10/08/2018 |
5 min read
Safe as houses? Maybe not. A recent study of 1000 property buyers by ME has shed light on people’s concerns when it comes to property purchases. Here are the top 5 concerns - and what you can do to play it safe.
1. Buying without a pre-purchase building inspection
A clear front-runner, with over 83% of home buyers citing the need for a proper inspection.
No home is perfect, so minor imperfections are to be expected. That being said, some flaws can be extremely difficult for buyers to detect and will present ongoing problems. Dampness and dodgy wiring are two classic examples.
Organising a pre-purchase pest and building inspection is a simple step that can ensure you’re aware of any problems, including those that could come with an expensive repair bill.
2. Not taking out building insurance on a property you purchase
Around 8 out of 10 buyers believe not having building insurance in place is a key risk, and they’re absolutely right. It really is a no-brainer to take out cover for your home. In fact, your lender is likely to make building insurance a condition of your loan.
3. Buying with friends and family
Three out of five home buyers see joint purchases with family or friends as high risk. But when handled sensibly, purchasing property as co-buyers can broaden your opportunities and options.
Reduce the risks by having an agreement drafted (preferably by a solicitor) that outlines how you will manage co-ownership – including what happens if one owner wants to bail out prematurely.
4. Buying an apartment ‘off the plan’
More than half (55%) of today’s home buyers regard off-the-plan buying as risky, and there can be greater potential for pitfalls simply because you’re making a decision based on plans rather than the finished product.
This makes it critical that you ask your solicitor or conveyancer to thoroughly review the contract of sale so that you understand what could change during the construction process. And only deal with reputable developers with a strong track record for quality constructions.
5. Choosing an interest-only loan
Interest-only loans may be suitable for some investors, but it makes better sense for home owners to stick with principal plus interest repayments. This way, you will own your home debt-free at a sooner rather than later stage.
Speaking with your lender or mortgage broker will help you pinpoint the type of home loan that’s best suited to your needs.
The bottom line
Buying property is a major step, and yes, it can come with risks. On the plus side, there’s plenty you can do to reduce the likelihood of something going wrong. Follow a planned approach, tap into the advice of experts, and take the time to ensure the home you buy is the home for you.
This article is brought to you by ME. For more information, please visit www.mebank.com.au
This information is provided for general information only. It does not take into account your personal objectives, financial situation or needs and should therefore not be taken as personal advice. You should consider whether it is appropriate for you before acting on it and, if necessary, you should seek professional financial advice. Issued by Equipsuper Pty Ltd ABN 64 006 964 049 AFSL 246383. MySuper Authorisation Numbers 33813823017672 and 33813823017518 (‘Equip’, ‘the Fund’ and ‘the Equip Rio Tinto Fund’).