To buy or not to buy…that is the question.
Buying a home is likely to be the biggest investment you will ever make. Current media reports of falling house prices, difficulty in obtaining mortgages, high interest rates and that the banks are in trouble has not surprisingly, made buyers nervous. And it has become more difficult to qualify for a home loan. So with all these negative factors, is buying a home in this current financial climate a good idea?
No matter how good the perceived deal, if you can’t afford it now, it will end up being a burden. So unless you have the money to afford payments and live a somewhat comfortable lifestyle, don’t even think about buying a home. Ultimately, you want to be able to enjoy your home and enjoy your life. Wherever you lay your head at night is a large contributing factor to our contentment and happiness. If you overstretch yourself with a mortgage, you may up resenting the biggest investment of your life and have to make considerable lifestyle cutbacks. It is very difficult to live a champagne lifestyle on a lemonade budget!
That being said, take a look at property’s track record. Buying a home may reap more rewards than any other purchase. Many people take on second or third properties and rent them out in the hope that they will become their pension nest eggs. Mortgage lending is a wide and fragmented market with thousands of products available, but if you have good credit, a stable job, a steady income and a good advisor, you have a good chance of getting approval. The more you can save for a deposit (usually 10% minimum) the better, as this will allow you to obtain more favorable lending rates.
Houses do appreciate, or in other words gain value with time, and are generally regarded as a good investment. Aside from the investment factor, owning your own home gives you the opportunity to make it your “own” and imprint your individual style and decorative preferences. The alternative is that you pay a landlord to rent one of their properties and effectively allow them to reap the benefits of possible value increases.
Generally, homes appreciate at about four or five percent a year, and while it may not gain value as quickly as, say, a mutual fund, it will always be there. And unless there is a collapse in the housing market (as we are seeing at the moment), the value of your home will do nothing except increase over time.
The property market does fluctuate on a regular basis. One moment it’s booming, the next it seems to have flat lined. Prices go up and down. So just like other economic markets, property is something you should have patience with. Like everything else, markets go through cycles and trends whether that’s bull markets, bear markets or simply, market corrections.
Buying a home is indeed an investment in your future. Even if the markets are volatile think of the long-term rewards and do as much research as you can before making a final decision. Buying a home is a big commitment, not only financially, but also the time and energy you have to put into maintaining and improving it. Get the best financial advice and deal with a reputable estate agent. Last but not least, if you do decide to take the plunge and purchase, don’t let media reports of house price fluctuations fluster you. In reality, the value of your home is only ever relevant if and when you decide to sell up and move to pastures new.
Related posts:
- Is property sharing a good idea?
With the cost of a mortgage, their limited availability, significant...
- 21 Quick Personal Finance Tips
With all the financial help and advice available online, it...
- The Simple Guide to Financial Abundance
Managing money is not as simple as working out your...
