Buying a house and becoming a homeowner is a common ambition, and is a significant milestone most people aspire to. While renting a property gives you some freedom, becoming a homeowner is the first step towards financial security and stability, and is also a more dependable form of investment. However, building up equity in a home can be very difficult and even getting on the first rung of the property ladder can feel like an impossible task. There is lots to consider in terms of mortgage interest rates, the fees involved and whether you have the financial discipline required, but becoming a homeowner is achievable and here we have put together a list of the signs you can identify to suggest you are ready.
Renting is starting to feel futile
Although your rental agreement should protect you from arbitrary rent increases, the price you pay for renting could be more volatile than mortgage payments. It can feel like rent is starting to suffocate you financially, particularly when you have nothing to show for it in terms of ownership and equity. If you feel like renting is putting you in a cycle with no end to it, and it is beginning to feel pointless, and of course you have some financial stability, then it might be time to consider home ownership and a mortgage. In many cases, monthly mortgage payments could be cheaper than renting.
You have a good credit score
If you have no debt and a stable income then you are much more attractive to a potential lender. This is the sweet spot of course, and many people exist somewhere in between. But if you have a good credit history and have been diligent and careful with credit cards and loans, you are more likely to get a more favourable interest rate or loan terms from a lender. If this is you, then now might be a good time to become a homeowner.
You have manageable outgoings
Any mortgage repayments you agree in the future are likely to be your biggest monthly outlay, but most of us have other monthly obligations already. Ignoring rent and utility bills, many people also have financial commitments such as student loan repayments, life insurance, credit card balances and a personal loan for a car maybe. If you can demonstrate that you can manage these alongside potential mortgage repayments, then you are in a good position to become a homeowner.
You have a lump sum for upfront costs
First-time buyers can’t rely on the proceeds from a sale to part-fund a new property, so instead of equity they need to have a pot of cash to pay for a deposit, costs and fees of the conveyancing process and also ‘moving in’ costs. This usually goes towards furniture, furnishings and essential fittings, and maybe painting and decorating. Essentially you need to fund the initial costs of making a home immediately liveable.
You have recently encountered a major life event
Buying a house often follows a major milestone in life, such as getting married, having a baby, getting a job or earning a significant promotion. Having a stable income and outgoings always helps when looking to secure a mortgage, although a lender may have concerns about financial stability if you have just started a new job and are in the middle of a probationary period. However, if you have reached a stage in life where you are essentially not planning on moving anywhere for the foreseeable future, then it is a good time to consider becoming a homeowner.
You know what you want
It sounds simple, but if you have a very clear idea of what you want in a home, in terms of location and type of property, then this is telling you it might be the right time to take the plunge. We all have dreams of owning a home at some stage, but these can be unrealistic fantasies in terms of our current circumstances. But if you have a coherent and sensible vision of a property close to schools or work, and in a good area of the city, and it feels achievable, then a lender will probably see that too.
At Ison Harrison our residential conveyancing and new build teams includes experts in the property buying process, and this includes the various financial and lifestyle aspects to becoming a homeowner. As well as carrying out the conveyancing process for you, we can advise on the pros and cons of becoming a homeowner in your current circumstances, and using our professional skills, knowledge and expertise. So contact our team at Ison Harrison today.
