Getting any loan is a big step but getting a mortgage is really the biggest of them all. This is because it is usually for a larger amount of money than other loans. It also tends to last a long time – typically around 25 years and so it is a really big commitment. However, there are advantages to owning your own home which is why many people would like to. It is worth asking yourself a few questions to make your decision easier.
Can I afford the repayments?
It is good to start by thinking about the repayments on the mortgage. As you will be likely to be borrowing a significant sum of money then the repayments could be quite high. While interest rates are low at the moment, you may find it manageable but it is wise to also think about whether you will be able to manage the repayments if those interest rates go up. They may not go up for a while but it is bets to be prepared and think about what you would do if they did go up.
It is also worth just doing some sums and making sure you will always be able to afford them now. You might have some months that are more expensive than others, for example and that could mean that you will need to make sure that you can afford those. It is wise to actually look at your bank statements and work out what you can normally afford and if it will work for you. If you normally pay rent and the mortgage is a similar amount then this could be something that could help your confidence as long as you are always able to pay your rent on time.
Do I want to stay in one place?
It is worth thinking about whether you are ready to put your roots down in one place. If it is likely that you might travel to a s different part of the country or the world for work, for example then it might not be a good time to buy. If you do decide to move, then you have the hassle and expense of selling the house which could make things difficult. Of course, you could rent it out if you travel but that can also come with problems. You will have to change your mortgage to a buy to let mortgage and that will usually have a much higher interest rate so could be a lot dearer for you. You will also need to find tenants and you might need to pay a letting agent. There are also all sorts of safety checks that have to take place before you can rent out a property.
Will I have a regular income?
It is worth thinking about whether you feel that you will have a regular income for the whole term of the loan. It can be tricky predicting what might happen twenty years form now but it is still worth some thought. If you are in a trade or career that you feel will last then you can be surer that you will be employable. If you work for a company that is doing well then you can be surer that you will still have a job. The same goes for the industry that you work in. For example, IT support is something that is likely to be in high demand into the future but if you work on a production line then there is a chance that your job could be taken by a robot.
What financial difference will it make?
It is also worth thinking about what difference it will make to you financially in the long term and short term. Firstly, rent tends to be dearer than mortgage repayments so that can be a saving. However, you will have to pay for life insurance and buildings insurance as your mortgage provider will insist on it. You will also be responsible for any repairs and decorating that is needed on the property which could be expensive. The freedom to be able to do what you want with a property can be great, but this can be expensive.
One huge advantage comes when the mortgage is repaid. Although you will probably still want buildings insurance you will be able to cancel the life insurance if you wish. You will have no mortgage or rent to pay out and so you will have the rest of your life in that house without it. This can be especially useful when you retire and you do not have to worry about spending your money on these things.
It is a big commitment and a big decision though. It should be one that you take a lot of time to think about and it could be useful to discuss it with your family as well, particularly family members that have mortgages as they will be able to tell you about their experiences.