I’ll be honest. I thought that saving for our first home would be the worst part. I thought that once you had the deposit, it was all about selfies by the sold sign and popping the Gary Peer champagne. But I quickly things can go very very wrong, and they probably will somewhere along the line. The good news is, you will get through it. It might tear you to shreds and leave you morally confused as you sob into your almond capp over what’s essentially a first world privileged problem, but it will work itself out. Here’s what went tits up for us.
YOU CAN GET DECLINED BY THE BANK
A lot of people will tell you, “oh, home loans are easy to get because it’s a secured loan, so the bank can just repossess your property if it all goes tits up”. Yeah, nah. My partner and I had about $50k saved, both work full-time earning reasonable salaries, have good credit history and no major liabilities except student loans and a bit on a credit card. The repayments on the one bedroom apartment we wanted to buy would have been similar to the rent we’ve been paying for 3 years, but the bank still said no. They’ll come up with anything and everything to wriggle out of lending if they so wish. One bank suspected we were money laundering because of a tiny error on my payslip, one decided I had a tax debt (which I didn’t), one said they would lend to us despite my de-facto partnership visa and then changed their mind the day before the auction of a property we’d planned to bid on. Home loans are not that easy to get, and not all money is created equal – but you can prepare your finances for the best chance of approval.
YOU CAN LOSE YOUR FINANCE APPROVAL
Okay so you’re probably not stupid enough to bid at auction without having finance pre-approval from your bank. All auction sales are FINAL, so if you don’t have any idea whether the bank will lend you money, do not bid. What nobody tells you is that even when you DO have pre-approved finance, the bank can still turn around and laugh you out the door. In short, between giving us pre-approval for a $450,000 property based on a 10% deposit, our lender decided to change a teeny tiny policy that meant we had to plonk down an additional $10k, even though the property we bought was a lot less than our pre approval amount. If we hadn’t had the 10k, we wouldn’t have been written a loan – but we’d still owe the vendor the entire property price.
YOU WILL GET OUTBID (A LOT)
People have big fucking budgets. Huge ones. And you will get outbid, even if you’ve come to the party with an extra $20k over the expected sale price to try and snag the property. Investors have deeper pockets than you, and there’s a generation of baby boomers that are selling their homes for millions of dollars and downsizing – which means they want the same properties as you, but their budget is 15x the size.
YOU WILL MISS OUT ON AN AMAZING PROPERTY (AND KICK YOURSELF FOREVER)
Whether it’s because you’ve assumed a property is too expensive so you don’t go to the auction, or because you were too busy scoffing avo on toast to actually attend the auction, you will, at some point, miss out on a great property. The Melbourne market is totally fucked at the moment. Properties with amazing courtyards and Insta-worthy interiors are passing in below reserve, and total shit holes with wee-stained carpets are selling for $70k above reserve. You will never guess correctly. What’s more, the auction market in Victoria means that auctions are often scheduled at clashing times, so often you’ll have to pick which one to attend. Spoiler alert, you’ll probably pick the wrong one.
YOU WILL BE EMOTIONALLY BATTERED BY AUCTIONS
Okay, not necessarily. A few people I know have cruised through auction, often being the only interested party. So the property passes in and they all negotiate amicably over the coffee table with the agent and vendor present. NOT US. Oh no. Our auction was like a battlefield *sings Jordin Sparks*. Seven parties and bids spanning $110k, it was a long, drawn-out process that’s all a bit of a blur. We fought to the death with an investor who quite clearly gave zero fucks that I was about to explode next to him, and when he eventually gave up and conceded the property to us, I cried and had an enormous nosebleed. Needless to say the agent and auctioneer were a bit concerned.
So, first home buyers. I’m sorry to say it but it ain’t pretty. That said, this is just my version – like I said, plenty of people cruise through the process and buy the first property they’re interested in. But don’t expect it to be that easy. Be prepared for a wild old ride, filled with interest payments, a billion forms and more knock-backs than a Friday night on Tinder.