- Buy to improve your life
- Know your ability to buy a house
- Know the area
- Know how much you can afford
- Know which types of loans you qualify for
- Don’t forget mortgage insurance
Are you in the market for a new home and looking to get onto the property ladder?
Whether you’re making the daunting and exciting decision to buy your first home, or if you’re looking to upsize, or downsize even, there are a number of things you need to know before buying a property.
Buying a home isn’t the same as buying a new car: it can be an incredibly long, drawn-out process that requires heaps of home-buying preparation.
Sorry, wish we could say it’ll be an ‘easy-peasy’ experience but it won’t!
If you think you’re as well-prepared for buying a home as you can be, think again, it really is that complex. Remember, this will probably be the biggest financial investment that you will ever make in your entire life, so it really pays to know your stuff.
To help make things run a whole lot smoother for you, here are six things you should know before buying a home:
#1 – Buy to improve your life
Too many people out there seem to place an emphasis on money over happiness and quality of life, and that just isn’t right.
When buying houses, a lot of people buy to speculate with their money, hoping to make a tidy profit when and/or if they decide to sell up.
Unfortunately, this means that sometimes they miss out on what could have been their dream home.
When you are looking to buy a home, don’t worry about trivial matters that could influence the price when/if you sell, instead, focus on whether YOU like the house and feel it would bring happiness to you, and anyone else living there.
#2 – Know your ability to buy a house
Okay, one of the first things you need to consider before you even think of buying a house is whether or not buying at the present time is feasible.
You see, houses do not come cheap nowadays, so it is unlikely that many people will be able to afford to buy one outright. Instead, they will need to get a mortgage.
Whether you can get a mortgage will depend on a variety of factors, including your income, your credit history, your credit score, your book-keeping, your debts, spending habits, and anything else you can think of.
You will very likely need to have a pretty hefty deposit saved up. All these things will influence your ability to buy a house.
To make the process easier, you can utilize a mortgage calculator online to find out what you’re entitled to, and how much you will have to pay each month.
#3 – Know the area
For many people, it isn’t just the house that they live in that makes a difference, but also the area. If you are looking at buying a new home, it is strongly advised that you get to know the area very well.
If you are moving somewhere new (i.e. new city or province), make sure to do your homework and find out as much about the area as possible!
Look at transport links, schools, shops, retail, and other amenities and see what’s available to you. You should also try to find out whether the area is generally safe.
Let’s face it, some parts of the country are rough and have high levels of crime, and the last thing you want when buying a property is to become a victim of crime, especially when you’re new to the area.
The more you know about the area, and indeed surrounding areas, the bigger your advantage will be when the time comes to buy.
#4 – Know how much you can afford
When buying a property, one of the hardest parts of the process is saving enough money to put down a deposit.
While you can probably go with lower deposits of around 5% of the total value of the property, many experts recommend 10% at least.
Not only do you need to save a deposit, but you also need to know how much your mortgage payments will be, your bills, taxes, insurance, shopping, and anything else you normally pay for.
Figure out how much you earn on average, work out roughly how much you’ll need to pay each month, and then see how much is left over. There will always be some hidden costs, so try to factor those in as well.
#5 – Know which types of loans you qualify for
As mentioned, when buying a house, you will likely need to get a loan, in the form of a mortgage. Different lenders offer different loan structures to people in different circumstances.
If you have a bad credit history and rating, this will make it harder to be approved for a loan, but there are lenders out there who offer mortgages and loans to people in this exact scenario.
You can use a mortgage calculator online to get a rough idea of who may offer you a loan, and what kind of mortgages they can offer. Again, do your research and take your time.
#6 – Don’t forget mortgage insurance
When factoring in the costs associated with buying, there’s a chance that you may also have to pay mortgage insurance.
This insurance is put in place as a safeguarding measure for the financial institution, which basically compensates them in the event that the buyer defaults on their loan. As an FYI, the standard mortgage calculator may not include these costs, so just consider that beforehand.