The time has arrived to buy a home or has it? While you are contemplating the options in your mind of buying a house and probably browsing the real estate market for a place that you can call home, here are a few questions to ask yourself to see if you are financially ready.
Do you have a budget in place?
Being able to efficiently manage a budget is what can make or break your home-owning adventure. Knowing how to master a budget can prepare first time home buyers. It can help you manage your finances to handle the monthly repayments on your home loan, rates and council rates to name a few.
When setting up a home affordability budget it is important to consider if you will be able to afford your home loan along with ongoing monthly costs that come with maintaining your home. Consulting a financial advisor can help you plan accordingly and help you avoid mistakes that first time home buyers make.
Do you have a sizeable deposit in place?
Having at least 10 - 20% of the purchase price for a deposit saved up is generally a good indicator that you are ready to afford a home. It will also give you a good standing with lenders as it shows that you are financially prepared to own a home.
It is also a great sign to see if you will be able to afford the home that you want. Keep in mind that even if you can borrow up to 95% of your home loan from a lender, it will take you a long time to pay off and could end up costing you more. While there may be concessions that are offered by the government for first time home buyers, it is always important to carefully read the implications that come with it along with your home loan.
Do you have life insurance?
Although it is not a requirement when applying for a home loan, having life insurance can play a significant part in getting your home loan approved. Not only does having life insurance prove that you are prepared, but it also shows lenders that your bond will be paid off even in the event of death. You can find out how life insurance can help you on your journey of buying a home.
Can you afford the running costs?
The price tag on your dream home may be tempting, but always consider the hidden costs such as utilities and rates which can change the numbers quickly. Always check the running costs and do research. It will be harder to back out of a house once you have bought it, so it is always better to be safe than sorry.
Can you afford a home loan?
Consider the monthly repayments along with the interest rate that comes with purchasing your home. Always calculate how long it will take you to pay off your home loan on time and how it fits into your other financial goals you may have in place.