Here in Australia, we are into home ownership in a big way. So is it time to bid your rentals adieu and think about investing in your own home sweet home? Here are six questions to ask yourself, inspired by Globe and Mail.
Why Do You Want To Buy A House
Does it fit into your financial plan, or is it because everyone you know talks about mortgages at dinner parties and you feel left out? Understanding your own motivations when it comes to home ownership is crucial, because you have to know it’s worthwhile and you can stick with it once the mortgage repayments rear their ugly heads. Does home ownership fit into your long and short term financial goals? If you haven’t worked out your financial plan, sit down and assess that first before signing on the dotted line.
What Values Will I Honour By Buying Or Renting?
What do you want in the next five years? The flexibility to travel? A place to start a family? Personal finance advisors suggest thinking about your five year plan, and whether renting or home ownership suits that plan better. The timeframe is because you’re likely to keep the house for at least five years, or risk selling it at a loss. Is the house you desire in keeping with your projected financial situation over the next couple of years? Both are completely viable options, you just need to consider which one will suit you best.
Are You Ready For Home Ownership?
Home ownership is (I imagine) a bit like car ownership, it breaks your heart. Your home is not only a pace for you to live, but also an asset. You improve the space around you to improve your quality of life, but also so your asset doesn’t depreciate and your resale value is improved. Home ownership is not just about choosing matching colours. It appears to be about scraping and cleaning and gardening. It’s a tough task, so you’ve got to know that you’re up for it.
Do You Have A Steady Job Of Income
Getting approved for a mortgage is no walk in the park. Even inheritances don’t count towards earnings, so before you decide to buy a house, you’ll need to be on provable, consistent and quite good earnings to get approved. Understanding your own financial situation thoroughly will allow you to gauge the amount you can spend on the house, and will allow you to address issues before they become problematic.
Do You Have The Deposit?
Getting a deposit together is a huge ask, but without it you’re likely to be thrown to the mortgage wolves and end up paying huge amounts in interest. On top of this, you need to calculate the costs you will be liable for in monthly repayments should interest rates rise. If the past couple of years have taught us anything, it’s that the mortgage repayment buffer zone is the most important zone in town.
How Much More Are You Up For?
Talk to a financial planner about how much more money per week you will be spending on a mortgage as opposed to the rent you’re currently paying. Pretend you’re paying it for a couple of weeks, and see how you cope. You want your first home owning experience to be a fulfilling one- challenging, but not impossible. Ask yourself these questions and you’ll be prepared for buying a house, or staying on the rental market.