Signs You’re Not Ready to Buy a Property
Buying a property is a really big deal. It can offer you more security and the ability to make money and climb the property ladder, but it is also one of the biggest financial commitments you will ever make, so you need to be sure you’re making the right decision at the right time.
With that in mind, here are some signs you may not be quite ready to buy a property, if you can identify one or more of these factors in your own situation, you may want to think very carefully before going ahead and buying a piece of real estate.
Your credit score is low
If you have a low credit score, chances are you will not be able to take advantage of the best home loan interest rates. Some lenders may also require you to pay a larger deposit. How much deposit you will need depends on a wide range of factors, but creditworthiness is often one of them.
Check your credit score, and if it’s not ideal, wait. Try to boost your score by paying down debt for a while, and then come back to buying.
Your mortgage quill be more than 30 percent of your income
If your mortgage is going to set you back 30 percent or more of your monthly income, think again. Most personal finance experts agree that paying any more than that could leave your finance stretched. The last thing you want is to buy real estate only to find you can’t afford that or your bills at the end of the month. Good financial management means having something left over for emergencies and if that’s impossible, it may be prudent to wait. Which brings us to…
You don’t have any emergency savings
If you don’t have an emergency fund to cover you should you get sick, lose your job or hit another financial disaster, you may not be ready. Financial setbacks are often unexpected, but they are a fact of life. If you can’t cover them, you could end up in financial difficulty. Not only could this make life touch, but you could potentially end up losing your property. Focus on building your savings and only then should you buy a house.
You don’t have a 10 percent deposit
Although some lenders ask for a lower down payment, having a 10 percent deposit available is smart. Why? Because if you pay 20 percent or less as downpayment chances are you’ll have to pay for private mortgage insurance. This can cost thousands of dollars a year. By waiting just a little longer you could save a fortune. It may not be what you want, but it is the smart thing to do.
You have a lot of debt
If you have a lot of debt, clearing that should be a priority. The longer you leave your debts, the bigger and more unaffordable they will grow. That means you’re more likely to default and end up losing everything, Pay off your debts and then think about buying a home.
Spot any of these signs in your life? It could be a good idea to hold off and get your finances in shape before you buy.