Mortgages are long-term debts, and if you don’t pay your mortgage installments as agreed with the lender, you could end up losing your home and becoming homeless (and potentially still have to pay the mortgage until the house gets sold).
If you’re thinking of investing in a house for the first time in your life, you need to make sure that it’s the right decision. Should you be unsure about that, take a look at these top signs that you might not be ready to invest in a house:
1. You Can’t Afford the Downpayment
Perhaps the biggest reason many first-time buyers aren’t ready to get a mortgage and invest in their first property is that they aren’t earning enough money to save for their mortgage downpayment or deposit.
If that’s the case for you, wait until you have enough money saved up before considering a mortgage.
2. You Don’t Know Which Lender Is Right for You
There are many mortgage lenders available on the market. However, you need to keep in mind that each lender offers different rates, deals and has differing lending criteria to its customers.
The number one rule of buying a house or any other residential property is seeking out the best mortgage lenders for your needs. If you just assume you should go with whichever lender approves you for a mortgage first, you’re probably not ready for property investment.
3. Your Credit Score Sucks
Mortgage lenders take a considerable risk on lending money to people so they can purchase properties. They must ensure that applicants meet their lending criteria, and one way for them to achieve that goal is by checking the applicant’s credit score.
If your credit score is low due to past problems with lending or credit cards, now isn’t the right time to invest in property. That’s because you’ll only get approved by sub-prime lenders that charge high interest rates.
4. Mortgage Installments Will Cost Too Much
Mortgage lenders need to be sure that you can afford to meet your installments for obvious reasons. A general rule of thumb is that a mortgage installment shouldn’t cost more than one-third of your monthly income.
Anything more, and you’ll need a better-paying job or will need a second income to avoid any financial disasters.
5. You’re Planning Big Expenses Soon
Saving for a downpayment and affording mortgage installments can take a toll on a person’s financial health. If you’re thinking about paying for significant expenses soon, such as a wedding, you should wait before investing in property.
Some people assume it’s best to buy a house before getting married and having kids. However, it’s worth waiting a few years so that your finances are under control before opting for a mortgage.