Buying your next home
If you are thinking of buying your next home - here is a choice you will be facing:Will your life come to an end if you don't have a walk in wardrobe? Is it important for you to have a home cinema, or would you prefer to be in a modest property, within walking distance of great restaurants and sporting facilities?There are so many choices when you start shopping for a home, and one difficult decision is whether to choose a new home (buying off the plans or buying something recently constructed), or whether to opt for an older property at a better price.There are plenty of pros and cons to take into account, but here are a few of the main ones:New Home:A new home is unlikely to need any ongoing repairs in the short term. Anything that happens in the first seven years should be covered by the builder's warranty. You won't have to worry about the ducted heating breaking down and costing you a fortune to replace.If something happens and you need to put the property up for sale, a new home is a more attractive option for buyers. It's likely to have more features and conveniences than an older home, and it won't have mustard coloured wall paper (unless you chose that option when you built!)Like all shiny new things, a new home usually comes complete with a higher price tag, which means higher repayments and greater likelihood of you experiencing financial hardship in the future. You will have less of a financial buffer if things change, like interest rates increase, sudden unemployment, or long term illness.Usually new homes are built in a more distant location, unless you really are stretching the budget for a new home in an inner city suburb. Because you're likely to be further out, it might take longer to achieve the growth that you would like - especially if the same house and land package is still available just down the road after your home has been finished for several years.Keep in mind, there will also be additional cost of finishing the home, such as curtains, carpets, landscaping and driveways.Older home:If you purchase an older home, it's likely that you will be in a better location with higher chance of capital growth. This means that you could make quite a bit on your investment by hanging onto it for a few years, or you might even choose to renovate in the future which could further boost the value of the property.It's likely that you will have a lower purchase price with lower repayments, which means a buffer for any unexpected things that might arise.You will have a better chance of building your investment portfolio in the future by keeping the purchase price down, rather than blowing the budget on building a new home.It's your personal choice whether you change anything, but there should already be window furnishings, established gardens and driveways so you won't have to finish the dream.On the flipside, an older home might be less attractive to buyers if you have to sell - or you might end up having to do some renovations to achieve a good price.There could be a need for ongoing repairs and maintenance which could be very expensive depending on the problem. If you discover a major issue with the foundations of the home, for example, the repair bill could run into the tens of thousands.One important step if you choose to purchase an older home is to obtain a building and pest inspection report. This will help to ensure that your dream home isn't riddled with termites, or about to slide down the hill.