Owning your own home is a dream that you probably share with many of the other people across the world. Unfortunately, getting a home loan is not always as easy as it sounds and for first-time buyers, the whole process can be very overwhelming.
Below are three things that you may consider before getting that mortgage:
The first thing that you need to do is to sit down and understand your own finances. You’ll need to take a look at your bank account and figure out how much you can afford to spend each month and how much you need to borrow to ensure that you can afford the property that you want.
Not only will you need to think about how much you’ll need to borrow to cover the purchase of the property, but you’ll need to be able to cover the fees that come along with this whole process and that includes the title transfer fees.
If the cash flow from your job and your savings allows, opt for a higher monthly amortization or a lower payment term. Longer-term mortgages cost much more and build equity much slower. Most people don’t always realize that by selecting a longer-term mortgage they will be choosing to pay dramatically higher interest charges over the life of the loan. Always look at the total cost and that includes interest charges and closing fees over the life of the mortgage.
In doing your financial analysis, experts recommend the 28/36 rule. That means your monthly payment on your mortgage must be no more than 28% of your gross income and your total debt payments must not be more than 36% of your gross income.
A mortgage is a debt. What you don’t want to happen is to accumulate debt as it will surely drain your finances. If your bank account is associated with a whole lot of debt, you might want to think carefully about trying to solve it by paying them first before going ahead and trying to get a mortgage.
Consider Sharing A Mortgage
If you are in a relationship that more or less would lead to marriage, consider sharing one your mortgage. Doing this when you a lower income can increase your chances of getting a better mortgage and getting the home that you want.
This is something which you will need to think about carefully before committing and so you should make sure not to jump into this. Your partner’s income could massively impact how much you can borrow so make sure to take advantage of this if you feel that you are ready!
Before taking out a mortgage, make sure to understand exactly what you can do to get the best deal possible!