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Are You Ready to Buy Your First Home?

Posted by James Tilford on September 2, 2016
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We touched on this point briefly in our Home Selling Guide but felt that it needed further elaboration.

No amount of preparation or financial stability could ever instil the complete confidence that we hope to have when buying a home. This is usually due to the magnitude of the purchase. For most, buying our first home will be the single most expensive transaction we will ever make in our lives and maybe the most important. In the current housing climate it’s become increasingly difficult to get yourself on the property ladder – which can be seen by the dwindling number of homeowners in the UK - making your first property that more crucial.

But, how do you know if you’re ready? The truth is; that is a question only you can answer. Readiness, will be subjective to the individual depending on their specific situation and circumstances. That being said, there are a few things that all wannabe home-buyers should consider before making their final decision.

Finance

There are a few layers of finance when considering a property purchase. Firstly; savings. A generally large sum of money is necessary for the down payment of a home which will only increase with the price of the property. Depending on the cost of the home you’re looking to purchase, you would need to have saved 10 – 20% of the amount for a down payment.home-buying-costs (1)

We then get to the secondary expense of buying a home; the mortgage. Unless you’re able to pay the entire asking price of your home upfront, expect to be paying a mortgage. This is usually a monthly payment, in which you are paying back the money that was borrowed for the cost of your home. Again this varies depending, on the home price.

Aside from the base costs, there are several other lesser known overheads that should be considered.

 

Career

Most mortgage lending establishments require all applicants to have been with the same employer for a minimum of two years for verification purposes. If you were thinking of switching careers, I’d hold off for a while.

The reason your career should be examined during this process is because the purchase of a new home could severely affect your career in a number of ways. The pressure of earning to keep up with a mortgage, relocating further away from your workplace or having to stay in the same role to remain eligible for a mortgage. Buying a home is a big deal, but is it worth compromising your career?

 

Love-Life

This may be the point that is most commonly overlooked and seen as something that is not substantial, but believe me, it is. Nothing will throw your life into turmoil, like a good ol’ heartbreak.

If in a relationship when considering a house purchase, both parties must be one hundred percent invested. This means financially and emotionally, each individual should be paying their way and want the home as much as the other. If an agreement can’t be made, buying a home may not be the best idea for your relationship.

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Family

There are very few things more important than family, even your first home will not compare. As this is the case, your family should be factored into the decision making process when purchasing a new home.

Will buying a new home put you further away from your family? Will you see them less regularly? Will you not be able to afford any financial arrangements you already have with them? Analyse who and what may be affected by this transition, then weigh up the pros and cons.

 

Investment

Many properties nowadays are bought for the sole purpose of investment, either letting or flipping at higher price than it was bought for. Going into your house purchase, this is obviously something that you would have decided beforehand, but maybe it should be considered even further.

If you’re looking at a buy to let, you should ensure that all overheads will be covered by your tenants and a plan is in place for when the mortgage is paid off. For properties that are flipped, do extensive research on the costs of improvements and prices in the current market.

 

Size

Buying a new home also means moving house, and sometimes downsizing. If you’re a large family or someone who intends to one day have a large family, moving from your current accommodation to something smaller may not be the best option.

Yes, there are positives of owning your own home as you’re in charge and can make whatever changes you wish, but those changes are impossible to make without space.

The best course of action may be to continue saving for something bigger.

 downhousing-your-home

Area

As the housing market has become cruel and unforgiving, it’s caused buyers to take whatever they can get.

Homes located in what is considered the nicer parts of the UK have skyrocketed in price over the last few years, causing buyers to look elsewhere for something more affordable. It just so happens that this affordable housing happens to be located in less prosperous areas.

 

Longevity

When you buy a house, you’re in it for the long-haul. If you’re young, free and in no hurry to settle down, you may want to rethink buying a home.

Unless your intentions are to reside in the same home for the foreseeable future there isn’t much reason to spend your nest egg on a house. Consider this when making a decision as it could save you a lot of time and effort in the future.

 

Timing

If you were not aware there are both good and bad times in the year to sell a home, dividing when you are likely to receive the most and least for your property. Conversely this creates both good and bad times to purchase a home within the year.download

As a rule, the summer will likely be more expensive than the winter months. Test this out yourself by comparing house prices in the two seasons.

 

Debts

Many of those in debt will ignore their outstanding payments and go ahead with purchases, not only is this a bad idea with property it’s probably impossible. In the process of buying a home, your credit score will be reviewed. If the company notices that you are still in debt, you will not be able to take out a mortgage.

Ensure all debts are paid off before enquiring about a home.

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