Buying a house is a big financial commitment, but what age is right for taking the plunge and purchasing your first home? Are you in your twenties and looking at a property, but not sure if you’re too young to settle down and get your own digs?
We outline some of the things to consider before you buy your first property:
Everyone is different
Financial circumstances are different for everyone, so while some of your friends might be buying homes, it doesn’t necessarily mean that you’re ready to take the plunge, or that you’re in the right financial position. Make sure this is what you want to do, and that you think it’s the best financial decision for you personally. You don’t want to risk investing all your savings in a property and then getting cold feet at the last minute.
Are you ready to commit?
Buying a house is a big decision and as well as a large financial commitment. It’s easy to be impulsive when you’re purchasing a house, but it can be a good idea to think long and hard about it before you drive in.
Buying a house can be a big decision and as well as a large financial commitment, it’s also a commitment to stay in one place for a period of time. Although you can always sell if it doesn’t work out, many people need to stay in a house for several years to make a profit overall.
Not only do you probably need to have a stable income to keep up the mortgage repayments, you may also want to consider what kind of financial cushion you have in place in case of tough times, and a financial plan to help ensure you’ll be able to manage.
Getting the Mortgage
Evidence of a regular reliable income can be a key factor in how much banks will lend you. As a general rule of thumb an individual can usually borrow 3-4 times their salary, while a couple can typically only borrow 2.5 times their joint earnings. If you’re self employed, it can be much harder to get a mortgage and you will need to be able to prove how much you have earnt over a certain number of moves to illustrate stability.
If you’re a first time buyer and you’re looking for a mortgage why not check out our guide? It highlights some of the key things that you might want to think about before taking the plunge.
Do you have enough for a deposit?
Although with the government’s Help to Buy scheme, you can now get 95% mortgages, as a rule of thumb, the larger your deposit, the lower your mortgage repayments. It’s also worth noting though that larger LTV loans can put you at a higher risk of negative equity, so that you can end up owing more than the property is worth.
Ideally you should try to leave a financial fallback in savings, even if you put down a large deposit, as you never know what could happen in the future.
Get your facts straight
Make sure that you know what all the terminology means, for example, before you buy it’s important that you know the difference between leasehold and freehold properties. It’s vital that you’re sure you know what you’re getting yourself in for, and that you look through all the paperwork and are sure you understand what you’re committing to, as well as knowing what will happen if you can’t pay up in future.
It’s key that you make sure you use a no flim flam approach and get ‘round all the legal gobbledygook, your lawyer should be able to help you with this when they look over the paperwork.
Be aware of the risks
If you’re taking out a mortgage, make sure you’ve thought about what would happen if you lost your job, or if additional unexpected costs came up out of the blue. You also need to be sure that you can keep up the repayments as you risk losing everything if you can’t!
Do you best to protect yourself from any of the things that could go wrong, and make sure that you always feel confident that you’re making the right choice. If in doubt, seek a mortgage adviser with experience to help. Make sure you do everything by the book and avoid cutting corners or jumping through legal loopholes as it could come back and get you in the bud later.
Don’t forget to get excited!
Buying a house can be rewarding emotionally, as well as financially in the long term. Owning and decorating your own little nest can be hugely fulfilling as well as an investment for your future.
If you want to read more about first time buyers mortgages click here.
If you’re interested in Help to Buy click here.
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