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For most people, buying their first house will be the biggest investment that they ever make. However, the worst thing you can do is get on the property ladder before you are ready.
Many people think that they’re “throwing money away” if they don’t buy a home, but actually, it may be the more savvy approach not to.
Today, there is so much pressure to own your own property, yet it is more difficult than ever before to do so. With that being said, read on to discover the key signs that you are ready to purchase a property.
It fits in with your long-term vision
The first thing you need to do is make sure that your long-term vision and your new investment align. This is a long-term investment, and so the last thing you want to do is purchase a house and then decide to move in a few years time (this is one of the horrible mistakes I made in the past!). With the best made plans in the world though, things can always change. So if you think you might want to travel, work abroad, or you’ve just got into a new relationship, wait a bit longer until you’re sure you want to be tied down to a house.
You have a solid emergency and savings fund
Once you have your own home, those annoying, unexpected expenses tend to become more frequent. After all, you now have everything from the plumbing to the boiler to be responsible for. This is why it is vital that you have a good emergency fund and savings fund before you purchase your first house. For help on what this is, have a look at this post.
You have a steady income
While nothing is certain in life, the more years you have been a business owner or the longer you have been in your position at the company you work for, the more your job will be viewed as steady. This gives you a good solid foundation for being a homeowner, and mortgage companies will be happier to lend to you. In fact, if you work for yourself, you need to have been in business for at least a year so you can show all your accounts. For individuals who are employees, you need to be able to show 3-6 months worth of bank statements.
You don’t have any debt (or as little as possible)
If you currently owe money on a credit card or you have a car to pay off, it is a good idea to sort this out before you start looking for a home. Mortgage companies take debt fully into account when assessing your eligibility and affordability, and while it doesn’t completely exclude you, it will certainly make it harder for you. Ditch the debt before taking on more. Student loans may also be taken into consideration, so check in with a mortgage broker to discuss your personal situation.
You have a high credit score
Once you have paid off your debt, it is likely that your credit score will improve too. However, there are other factors that influence your credit rating. This includes the average age of your credit accounts, as well as when you last made a credit application. It is a good idea to download your report so that you can improve it and monitor it. Make sure you’re on the local electoral roll too as this will impact your score.
You have an Agreement In Principle
If all of the signs that have been mentioned so far apply to you, the final step is to make sure you get an agreement in principle which proves that a bank is willing to lend you a certain amount of money to purchase a property. One of the biggest mistakes people make is property shopping without having a mortgage sorted out. This could result in a big waste of time and a whole lot of disappointment. If you have one of these in place, you know what you’re able to purchase, and you’ll be demonstrated just how ready and serious you are.
Hopefully, you now have a better understanding as to whether you are ready to purchase a house or not. If you feel that you are not ready, don’t worry. There is no time limit on when you should purchase your first home. The longer you wait, the more money in theory you can save.
Life has a different path for everyone, and it is always better to wait and few years and move into your home when you are comfortable, rather than stressing yourself out with the wrong decision.
I hope you have found that useful and some food for thought. Property buying is not a speedy process, and it definitely shouldn’t be rushed. Set yourself up right from the start, and you’ll have no regrets!