Mistakes to avoid when taking the step to home ownership.

Sept. 10, 2018, 9:37 a.m.

A working class person like yourself will at times hear family and friends mention that renting is just like throwing money away or throwing money down the drain. You may have heard also that owning your own house increases your net worth. This many see you jumping impulsively into buying your very own property.


Before you do take that step, there are a few pointers that need to be taken into consideration.

Not mapping out your next 5 years

Many jump into the idea of home buying without mapping out their lives. Once you purchase a house, it may be a time consuming and costly affair once you realise that you do not need it and that it has become a costly affair. To make sure that you dont lose alot of money, it is always advisable to purchase a property of your own if you plan on staying in it for 2 - 5 years.

Buying a house when not financially ready

Taking out a mortgage will mean more obligation for you. Apart from the obvious down payment which is compulsory, taking a blind leap of faith and purchasing a house on a mortgage will be a big step for you especially as you will have to cater for loan repayments, home repairs and even the household items. This may take a toll on your pocket and could even see a miss in a few mortgage repayments. It is always advisable to have an emergency back up fund to tap onto when you fall on hard times.

Letting Bank or Realtor know your affordability

When you apply for a loan, the banks will always give you a maximum amount that you can take from them. In many cases, based on the bank’s assessment of how much you can afford, you will be given an upper limit of what you can borrow. Many first time buyers assume that they can afford to borrow as much as the bank will lend but this is not necessarily true. The bank sets the maximum limit based on the limited financial information available. Lenders don't know how a large mortgage could affect plans to do things such as retire early or save enough to fund your future plans. As you are the only one who understands your finances, it is best to sit down and budget to see how your projected mortgage payment affects your ability to take care of other important financial tasks.

Taking a loan from the first lender you find

Shopping for lenders may be really hard as it will spell alot of financial documents, fill out applications and meet in person with lenders to discuss loan options. Due to this, at times it will see people signing with the first lender  who crosses their path.To get the most affordable mortgages, apply with multiple lenders where you can compare offers ad get as much details as possible.

Not understanding mortgage

At times, it may be easier to leave everything with the bank and real estate agent and just sign off on the final paperwork with just a few questions being asked. At times there are fine prints and other conditions which need to be understood and in the end the buyer will end up with an expensive mortgage which inevitably end up in foreclosure.It is important to always ask what the starting payment is, how interest rates will work and what your payment could up to. These type of questions need to be asked before signing off on anything.

Foregoing first time home buyer incentives

The Fijian Government has introduced a few incentives which will assist first time home buyers where first time home buyers will get $15, 000 deducted from the overall cost of the property. This is an incentive by the Fijian Government to boost home ownership by Fijians.

Setting aside small down payments.

It is always advisable to always save up a big deposit for the property as this will mean that you pay lower interest rates.

Not negotiating with the vendor

It is normal to haggle on price when making an offer. When a price as been put on the table, that is not necessarily the final price. The Sales & Purchase agreement that you enter into sets the terms for much more than just the total you will pay. It is best that it contains contingencies such as clauses which specify that the transaction will not go through if the property does not meet your expectation.

Not carrying out thorough home inspections

When you finally settle on a home, always do an inspection which is thorough. If the house is new or looks new, it doesn’t necessarily mean that it is all good.At times, there are issues which may be covered up with the paint. If problems are discovered, it is best to rectify them as soon as possible before any pen is put to paper. You could also negotiate a new price as well.

Failing to consider resale price

When you look at homeownership, it is always good to look at the big picture and try to get a a probable future resale value.

Buying a house without understanding taxes


Property taxes can be a very expensive issue and in Fiji, there are different issues such as town rates, garbage fees and even leases. Therefore it is important to always keep these issues at the back of your head. Also, it is advisable to keep in mind that Government also has discounts for homeowners who sign up for their discounts on power and water usage.