Wanting to buy your own house and being financially capable of doing so are two different things.
While banks and financial institutes exist to help you make big purchases like this, it does not mean you throw caution to the wind and plunge you and your family into a long cycle of debt.
If you think you are ready to buy a property though, there are several questions you must ask yourself first. In this article, we’ll take a look at five of the most important ones;
1. Your financial situation:
It’s simple really. If you don’t have the money or the means to pay the bank back every month and live comfortably at the same time, then you are financially unable to own your property. Buying property is something you plan years for and this will include immense savings and a functional budget worked out. You must account for things like taxes, insurances, maintenances, upkeeps and market fluctuations.
2. Down payment:
The down payment amounts vary on the type of loan you pick up. A first-time home buyer’s down payment will be different from someone buying their third property for example. There are also loan-set up fees, agent fees, home inspections and other miscellaneous fees that you are expected to cover on your own and with cash. Preparing for this is important.
3. Stable income:
Buying and sustaining your property when you lack a full time job with a stable income is a dangerous thing to do. Unless you are certain that you can fall back on a stable monthly pay check, you should delay any thought towards purchasing property.
Being in debt is a cultural trend. There are very few people in the world that can safely say they lead a debt free life. From buying cars to shopping on credit cards, we constantly enter ourselves in a cycle of earning, loaning and paying back cash. However, as long as your debts are under control and you are comfortably living while paying them back, only then should you entertain thoughts about property buying. Buying a home arguably creates the biggest debt so being in control of your finances is essential.
5. Contingency plan & fund:
A backup plan and extra money to serve as a cushion against sudden setbacks is a necessary requirement. You should not put all eggs in the basket so to speak, instead squirrel sufficient cash away for a rainy day.