Should I buy a house?
Owning your own place sounds great in theory, but have you weighed up all the pros and cons?
For most of us, a property is the most expensive purchase we will ever make. While this shouldn't be cause for alarm, it's crucial to consider some key factors before deciding whether now is the right time for you to buy.
What stage are you at?
The first thing you need to think about is where you are in your own life. After all, being a homeowner is a long-term investment. Of course, there's always the possibility of selling your home or renting it out to tenants if you change your mind about it. Just remember, though, the success of this will rely on the strength of the respective housing and rental markets at the time.
Ultimately, once you have signed up for a mortgage the responsibility of monthly payments will stop with you. So if you feel you want some flexibility to up and leave at the drop of a hat - perhaps to travel or go back to college - now might not be the right time to be a property owner.
Can you afford it?
- You'll need at least 10% of the property value to put down as a deposit, which can amount to thousands of pounds
- The mortgage lender will also want to see that your annual salary equates to around a third of the remaining sum you want to borrow
- Remember, you'll also need to save for legal fees, stamp duty, mortgage arrangement costs and other unexpected costs
You should also factor in the ongoing costs of owning a home. You'll be responsible for Council Tax, energy and utility bills and home insurance, plus many homes have regular maintenance charges for general upkeep of the buildings and grounds. Make sure you're prepared for this financial commitment first.
When to start looking
The traditional time of year for sellers to start putting their homes on the market is spring. This is because - as well as Christmas being well behind us - the evenings become lighter, which simply makes it much easier to see what you're buying. Also, by starting the process in spring you should also actually move in the summer, which means longer days and, hopefully, less rain when moving all your belongings.
But, while traditionally February, March and April are good months to start house hunting, there's nothing to stop you looking at what's available all year round. As well as local estate agent windows, it's easy to keep track of what's on the market through online property search engines, such as Rightmove.co.uk and Propertyfinder.com.
The state of the housing market
Like any other kind of market, the housing market is not always buoyant. In fact, during the credit crunch the housing market crashed, wiping 25% off the value of an average property and closing down hundreds of estate agents.
"Once you have signed up for a mortgage the responsibility of monthly payments will stop with you"
For first-time buyers, a bad property market is something of a double-edged sword. While prices are lower, putting you in a better position to negotiate, there are also likely to be fewer properties on the market.
However, the current state of the property market is certainly something to consider before making the first move towards owning your own home. Websites like Zoopla.co.uk and Mouseprice.com will tell you estimated prices for individual homes in the UK and recent fluctuations in their values and you can search for recent sales in your area on UpMyStreet.com.
Interest rates are set every month by the Bank of England. Mortgage lenders loosely base the cost of their mortgages on these, so it's worth checking out what they're doing and understanding the different types of interest rates available. Bear in mind that even the experts can't be sure on future movements of interest rates, so always make sure you can afford your repayments if the rates were to rise.
General pros and cons
Finally, it's also worth weighing up the more general pros and cons of home ownership before taking the plunge.
- You have the freedom to change the property to suit your needs - providing it's in the realms of planning permission - such as extending and decorating to your tastes
- You won't be forced to move out at short notice
- You'll benefit from any increase in the value of your home
- Your monthly payments will be going towards something you own rather than to a landlord, giving you more financial security in your old age
- You'll be forfeiting the flexibility of being able to move quickly
- You're financially tied to monthly expenses
- There's no guarantee that your property will rise in price
- You have to shoulder all the unexpected costs that arise, such as boilers breaking down, leaky roofs etc
By Laura Howard
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