Buying your first home is an exciting stage in life, but it’s becoming more of a challenge for people in their twenties now than it was ten years ago. If you want to move from your family home or get out of rented accommodation, you need to have taken steps to ensure that you’re ready and have the finance in place to be able to afford your own home.
Before you consider finances, ask yourself if you are ready to make the commitment and take on the responsibility of a mortgage and house maintenance. If you’re used to calling a landlord to fix leaking pipes and you don’t have to pay for repairs and so forth, it might come as something of a shock to take on all the hassle and expense of owning your own home.
As well as the financial commitment and the maintenance issues, how good are you at looking after yourself? Are you good at budgeting for groceries and other living expenses for example, and do you know how to undertake mundane chores such as cleaning the bathroom, ironing, and cooking healthy meals? These are basic life skills, but very often young people enter the world with only a tenuous grasp of how to carry out such tasks.
Once you’ve considered how prepared you are mentally and practically to owning your first home, it’s time to look at the financial aspects. Before you do anything else, you need to clear any existing debts.
Bank loans, credit cards, store cards; any form of credit you’ve had should be reviewed and repaid as quickly as you can. Not only do debts cost you money in interest and charges, but they’ll affect your credit rating and your ability to borrow for a mortgage. Pay off credit cards and store cards first, and once you’ve cleared any debts, start saving for your deposit.
As well as the cost of your home, there will be many other expenses to consider, such as:
- Legal fees
- House insurance
- Moving expenses
- Furniture and equipment for the new house
- Stocking up with food and household sundries
You may also need to consider factoring in increased traveling expenses if you’re further away from where you work, and changes to payments such as car insurance that could be affected by a new address or keeping the vehicle on the road for instance.
If you don’t already have life insurance, consider taking out a 30-year term life insurance policy. These are a good option for first-time buyers, as they will cover the years that you expect to be paying your mortgage, meaning the repayments are covered if anything happens to you.
Calculating the mortgage repayments without considering all the other costs you’ll need to cover would be a problem when you started life in your new home, as you’d be struggling to cover all your expenses. You’ll also find that when you start looking at mortgage providers, they will have strict guidelines in place to ensure you are able to afford your repayments.
Make sure you’ve covered all the bases before you start out on your house-buying journey, and you’ll find the whole experience goes far more smoothly.