Buying a home is going to be one of the biggest things that you buy in your life. And as such, small mistakes are likely to cost you a lot of money or take a lot of time to rectify. So if you are going to be buying a home, whether it is for the first time or not, then you need to make sure you know what you are doing. The price needs to be right, and what you are buying needs to be good value for the money that you are paying. House prices have been rising in recent years, which can add more pressure and cost to anyone that is looking to buy. So you need to almost take a step back to figure out what you can afford, what kind of investment it will be, or even if you need to buy right now at all.
Should You Even Buy Right Now?
The location of the property is going to be one thing that will give you an indicator as to if this is a good investment idea for you. Take the UK, for example. Around a decade ago, no one had on their radar that there would be an end to the house prices rising at that time. And while that was short lived and they’re rising again, it can still be unclear what is going to happen in the future.
Take somewhere like Singapore as another example. The Housing Development Board (HDB) aims to develop public housing to provide Singaporeans with affordable, quality homes and a better living environment. But in recent years, even the HDB resale price has been lower and lower. That can be a good thing if you are looking to buy, but not necessarily a good thing if you are wanting to sell. So you need to assess the market where you are, to see if now is a good time.
Calculate Mortgage Repayments
If you have decided that now is the time for you to buy, then before you even start looking at houses, you need to look at what you can afford. The mortgage is going to be the thing that is going to be your biggest cost, and you cost you the most going forward. So the best thing to do is work out how much money you would have each month to pay a mortgage with, and then look for a free mortgage calculator online to help you figure out what you’d be able to borrow if your repayments were that amount each month. You can alter the repayment time and how much deposit you’d be able to put down, and it can give a quick indication of what you’d have to pay back. From there, you can start your house hunt, and see what kind of property you’d be able to buy for the money.
True Cost of Buying
Alongside the main mortgage, it can be a good idea to work out the true cost of buying a property. If it is going to be quite a bit extra, then you may need to add that into the amount of money that you end up borrowing. So check on what ‘hidden’ extras there may be. Do you have any legal fees to pay? How about fees for arranging a mortgage or valuation fees? Moving vans can cost quite a bit of money, as well as surveys and any money to do home repairs or DIY before you move in (or before you move out of an old house). These can add up to quite a bit, so it is worth working out what it will be beforehand so that you can figure out how much you need to borrow.
Don’t Always Take The Maximum Mortgage
That being said, it doesn’t always mean that you should take the maximum money that they will lend you. Knowing how much you could borrow based on your deposit and income is useful. But they are a bank, after all, so don’t just think that you should take that amount, just because they’re willing to loan it to you. You don’t want things to be too tight and then you have to end up using credit cards (that the bank will happily loan to you), as that can lead to more debt. When you know what you can afford, then only look at properties that are in that region (or ones that are close to the budget that you can get a good offer on).
Check Your Credit Store
It can be a good idea to avoid applying for any mortgages before you check your credit score and know all about it. You need to know where you stand, as well as if there are any errors on it. The mortgage lenders are going to go through your records with a fine tooth comb. And if they see any discrepancies, then it can lead to rejection. So check your score and also the record. If you have any active credit cards that weren’t canceled but are no longer used, that are registered to an address that you used to live at, then it can flag up and make a lender concerned. Any records of missed payments, that weren’t actually missed, can be good to sort too.
If you are buying a home in the hopes of living there for years on end, then as long as you like the area and location, that is all good. But if this is just going to be a starter home or you know you won’t be in it for too long, then you need to think about choosing the best location. This will make the home sell much more easily if it is an in-demand area, as well as make sure that you get the best price for the home. You can check police crime stats on locations, as well as speaking to neighbors and locals to get the down-low. It is better to go into a house purchase with your eyes open.
When you take time to prep, plan, and do your research, a house purchase can go well and decrease your chances of getting into any financial trouble.