Are you thinking of getting onto the property ladder because you're concerned about being left behind? When prices keep rising, many people worry that if they don't buy soon they'll be priced out of the market. But buying a house is such a major commitment that buying could be a mistake if your circumstances aren't right. Here are some reasons not to rush to get on the property ladder …
One of the reasons not to rush to get on the property ladder is that prices do go down as well as up. We can never be sure exactly what is going to happen in the future, but plenty of people have ended up owing more than their house is worth after prices have slumped. Don't buy on the assumption that prices will always head upwards; crashes do happen.
You may think that it's better to be paying a mortgage than rent, but that depends on your circumstances. If your situation could change in the near future, for example your job taking you to a different city, buying may not be right for you. Buying a home should always be for the long-term, as the costs of buying and selling make it uneconomical to keep a home short-term.
However keen you are to own your own home, it's usually best to wait until you've got a more substantial deposit. For one thing, this will give you a cushion if prices fall and help you avoid negative equity. Secondly, a higher deposit gives you access to better mortgage deals and will save you thousands in interest.
If you don't have much in the way of savings, don't think about buying. Just buying a home will cost you plenty, and you should never borrow to fund the deposit or legal costs. Plus you will also need ample savings to pay for any repairs in the future and to help cover living costs if you're out of work at any point. Plus you'll probably have to buy some items for the house.
If there's any uncertainty about the future of your job, it's probably better to hold off on buying a home. If you find yourself out of work, you'll be living on unemployment for a while - and even if you find another job, it may be at a much reduced salary. And if you've got hefty mortgage payments based on your old salary, you'll soon be in trouble.
Buying a home isn't a race and you don't have to keep up with other people. Home ownership isn't always as wonderful as you might think, so don't worry about being left behind. It could be a mistake to buy because you're afraid of being priced out; only buy when the circumstances are right.
Finally, buying a home is an enormous responsibility. You're responsible for maintenance, which could be costly, and it's also more difficult to move. So don't think only about the advantages of home ownership, because there is also a downside.
Buying a home is such a massive commitment that you should never rush into it. Always do your research and think through all the ramifications. Do you worry you'll never own your own home?
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