If you’re looking to get your foot on the first rung of the property ladder, then times are about to get hard for you. There are plenty of things you need to do to prepare for homeownership.
Saving and budgeting are essential if you want to get a good mortgage or home loan.
But once you are accepted for a mortgage you have taken on an enormous commitment that is full of financial risk. Here’s what they are, and how to avoid them:
When you are just starting out, you can be a little naive and take the first loan offered to you. This is usually from your regular bank. Like anything else in life, you should shop around.
Use https://www.tomorrowfinance.com.au as a starting point to see just how many mortgage products are out there. You’ll also see how much interest rates vary as well.
A comparison site is likely to offer you a smaller interest rate and a smaller fee, so start there.
Without job security, you are taking a risk getting a mortgage. Ideally there will be two of you in full-time jobs that you have held down for at least a year.
With an employer’s backing, you can be eligible for more favourable rates on your mortgage product. You may also be able to borrow more money for a better quality home.
If you haven’t lived in many places before, then you may not know the warning signs of serious problems. Structural problems are your biggest worry.
Subsidence and building defects can become fatal if the building collapses. Your mortgage lender will want a basic survey done to confirm the house exists.
Documents and land searches will be checked. But you should pay for a detailed survey to ensure you have no problems with things like the boiler or plumbing.
Know exactly what you’re getting into so you know how much it will cost.
Very few first-time buyers fully consider the cost of living as a homeowner. There are lots of different insurance policies you will need to take out too.
Heating and lighting and water charges, as well as taxes, all mount up to more than your mortgage repayments. Then you will need to decorate and furnish your home.
Add to that the cost of food and commuting and your monthly outgoings may be substantially higher than you are used to.
Image source Flickr
Your home will need regular maintenance. The roof may need replacing every twenty-five years. The outside will need painting and repairs.
What about gardening? Do you need to install new paths or lighting out there? Your front door may be damaged and need replacing.
Use a careful budget to have a maintenance fund squirrelled away to take care of these costs.
Owning a home is expensive, and you will have to spend a lot on the property to maintain its value.
But property is a good investment, and we all need a roof over our heads.
If you’re in a good place financially then it might be worth taking the risk of property ownership.
Enjoy your new home.