Are You Ready For Your First Home? Ask Yourself These Crucial Questions
Many of us dream of owning our first home. Finally, a space to call our own, which we can decorate how we please, fill with every animal we’ve ever dreamed of, and which suits us perfectly. But not all of us are in the right place to take on such huge amounts of responsibility, as cool as it would be – it’s a huge commitment after all. If you’re keen on buying your first home, but you’re just not sure you’re ready, ask yourself these questions.
Can I afford the deposit up front?
It is common that a deposit is asked for when a house is purchased, even if a home loan will be the main way to finance it. Having a cash deposit of around 10% of the asking price of the house is necessary for anyone wishing to take out a home loan, so if you’re not quite there, it’s worth waiting a while longer.
Do I plan on sticking around?
If you plan on traveling the world, moving state for your career, or even settling down with a new partner, you’re probably not quite ready to own a home. Remember, once you own the house, you’ll either have to sell it or put it up for rent if you wish to move out of the city, which for many people can be very costly, so it’s best avoided. If you’re planning on setting down in your current town for the foreseeable future, buying your home is a great idea.
How do my finances look?
Not only do you need the deposit, but you also need to know that you’ll be able to keep up with the home loan repayments. If you’re not able to, you will default on the loan, and the company will take your home and your deposit by way of compensation. Ensuring you can afford the upkeep includes a credit check, which looks at your financial history to understand your responsibility and spending habits. Checking yours before you apply for the loan can save a lot of problems, so check this before you request your credit score so there are no surprises. If you don’t think you’ll be able to keep up the repayments, or your credit history looks like nobody would trust you with a loan, spend a few years improving your credit and building up a stronger financial position.
Can I handle the responsibility?
When you’re living in rented accommodation, you can usually trust your landlord to come out to make any repairs or deal with problems in an emergency. When it’s your own home, you don’t have that safety net. So if you’ve always been the type of person to leave a problem to the last minute before dealing with it, or putting it off altogether, it might be worth waiting a few more years before taking on the responsibility of owning a home.
There is a lot more to owning a home than just being able to decorate it as you see fit, and it can be a huge responsibility, both financially and to yourself. Make sure you’re ready before you jump in with both feet.