5 signs you’re ready to buy a home
Everyone has their own dreams. Some want to be famous while others want to become entrepreneurs, and it’s quite hard to share a common dream with everyone in the world. But, if we had to take a wild guess, we’re pretty sure that at least 95% of the world’s population dreams about owning their own cosy home.
Whether you’re thinking of starting or expanding your family and need more space to raise your kids, the thought alone makes you experience an adrenaline rush! But as much as it is thrilling, becoming a homeowner is a huge commitment. It makes sense to want to be certain before taking the plunge. The question that many struggle with is how to tell if now is the right time.
So, if you’ve slept on that thought and couldn’t seem to brush it off, then we’re here to highlight the checklist to bear in mind before taking that big leap!
Your income
By now, it’s essentially clear that a steady income is one of the main requirements to have when applying for a loan. Here, you need to take into account both the past and the future, meaning, you need to have a work record for a couple years and counting. If you’ve been working at a company for 5 years and are planning to stay longer, your chances of getting a loan are much higher than if you’ve been newly employed.
It’s not just about being eligible for a loan, you’ll also need to think about having a steady income to make your monthly instalments.
Your savings account and emergency fund
Since housing loans need to be carefully managed, it’s important to always have a backup plan just in case something unforeseen happens. If the portion you’re planning to take out of your income may not cover your monthly instalments, for any reason, then you need to have another means of payment to avoid accumulated interest and postponement fees. A savings account or an emergency fund are great ways to start. If you estimate that these accounts have enough money in them to cover your instalments incase of an emergency, then you’re one step closer to getting that loan.
You’re comfortable managing debt
If you have a demonstrated history of managing your debt, you’re more likely to not just obtain a loan but also secure better terms! And for those that have diligently paid their monthly instalments to the point that there’s almost nothing left in terms of debt, then they are more than ready to apply for a housing loan.
Even if it’s your first time taking out a loan, your relationship with the bank will pay off. What we mean by relationship is for example that you don’t have accumulated debt on your credit card, you have a monthly salary, a savings account etc…
You know how much you can afford
Homes require down payments as a first step. If you cracked up all the equations you’ve put in place and mapped out exactly how much you’re willing to put down as down payment, need to take out as a loan and are able to pay as instalments, then you have it in the bag! Good financial planning is critical when deciding to take out a loan!
Future goal alignment
Your future home will generally involve larger expenses, later on in life you’ll need to maintain it, change pipes, remove or add furniture. So you’ll need to keep these expenses in mind so it doesn’t affect your instalments.
Before you buy your dream home, make sure that no future goals like starting a business are planned which will lower your chances of being able to afford your mortgage payment. If your goals are aligned in this way, then you should be able to start shopping for a home.
If you ticked all the boxes, then congratulations! You are qualified to apply for a housing loan and bask in the feeling of purchasing a house. And if you’re still in doubt, no worries! Pay us a visit at any of our branches and our financial advisors will help you plan out your future home as! Just don’t forget to invite us over for coffee!
