This is article three in the property Investment 101 series. In these articles, I am giving you a little knowledge if you are just starting to look for a property. We have dealt with the reasons why I bought my home and also mistakes I have made along the way. Today, we are dealing with what you need to do before heading out to buy property.
The most important factor is the affordability assessment. What is your current income level , your expenses including other loan commitmment as well as savings? Will you be able to afford paying your monthly mortgage payment as well as the other costs that comes with owning a home? How big is the property that you are looking to buy? Are you going to be living alone or share the place with someone?
For me, I have always shared a flat with my cousin when I moved to the coast. Because of this arrangement, I was not used to paying 100% of the water and electricity cost as we share the bills. Moving out and deciding to stay alone will mean there will be a jump in my monthly costs hence we moved to my new place together.Whatever you do, just make sure that you will be able to afford the new lifestyle.
How is your credit history looking and is there anything that can backfire? The things to watch out for is that you do not have any bounced debit orders as this is normally taken a sign that you are not committed to your payment terms. Do you take any pay-day or other short term loan? Are you on anyone’s black list? Do you have other loan committment that may make the bank worried. My advise is that you pay off any smaller debt that you may have to make room for the new installment coming.
Your credit history tells the bank how risky of a customer you are and ultimately influences the interest rate that the bank will charge you. The more reckless you are with spending, the more expensinve your debt will be.
Finally, get in the habbit of saving an amount equivalent to bond payment you will be making. This allows you to see how much income will be at your disposal if you were to start settling your bond right away. Will you get to pay day comfortably? Do you maybe need to pick up a side husttle to help you buffer your income? Whatever you save in the simulation stage can help you cover your upfront costs such as bank fees and lawyers costs.
Take your time, the house will not sell overnight unless they can get a cash buyer.