Is Now The Right Time To Buy Your First Home?

Buying a house is a big life decision. It can be a great one financially or it can be a devastating one financially. Here's some thoughts from a reader on things to consider before you decide to buy a house or not. These are definitely important considerations, for example, regarding the right time in your life- I bought a house together with my husband when my marriage was on very rocky grounds; waiting for a better time in my life could have made my divorce much less complicated, to be honest.

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Buying a house isn’t a decision that you should rush into. Unfortunately, a lot of people assume that it’s best to buy a home as soon as they possibly can and they don’t stop to think about whether it is the right time. But if you buy a house at the wrong time, you could end up spending more than you need to, and you risk putting yourself in a difficult financial position. 

There are a lot of factors that affect you when buying a house and you need to consider all of them before making your decision. In some cases, it’s best to buy a house right away, but there are a lot of circumstances where it’s best to hold off for a while instead. If you are thinking about buying a house, here’s how to decide whether it is the right time or not.

Can You Afford It?

This is the most important question to ask because if you can’t realistically afford to buy a house, you should wait until your finances are in a better position. The problem is, a lot of people don’t really know what it means to be able to afford a house. Just because you have the deposit saved, that doesn’t mean that you can afford a house. You also have to consider how much your mortgage will be and whether you can afford the monthly payments. Use a hdb loan calculator to see what you can afford on your budget and how much your mortgage will be every month. Then, add up all of your other expenses and think about whether you can realistically afford it or not. People often make the mistake of buying a house that is too expensive for them, only to realize that the mortgage payments swallow their entire paycheck and they struggle to pay the rest of their bills or save any money.

When you are making your calculations, you need to consider the other costs associated with buying a house and being a homeowner as well. For example, have you thought about all of the legal costs and real estate agent fees etc? Have you considered how much the maintenance on the property will cost and what you will do if the boiler breaks or the roof needs repairing? People forget these costs and then find themselves in trouble further down the line. In some cases, you might find that the costs associated with renting are more manageable than those associated with owning your own home, so you should hold off buying for a while.

Are Interest Rates Good?

If you have decided that you can afford to buy a house, you should check the average interest rate on mortgages at the moment. When interest rates are very high, that means you will pay more on your mortgage each month. If you get a variable mortgage, you could get lucky and interest rates could drop. However, they could go the other way and shoot up even further. It’s a good idea to hold off if interest rates are particularly high because you will save a lot of money over the years with a lower interest rate.

If you are consistently offered mortgages with a high interest rate, even though average rates are low, that may be down to your credit rating. People with a difficult financial past and a lot of debts are likely to have a low credit score and lenders will not have much trust in them. Waiting until you can pay off your debts and improve your score will save you a lot of money in the future.

Do The Housing Markets Work In Your Favor?

Your own financial situation is important, but you also need to think about the housing market and whether it works in your favor or not. If a lot of people are selling up, you will have plenty of choices and you will also have more bargaining power. When it’s a buyers market and you have the deposit saved up, you should take the opportunity while you can. However, if it’s a seller’s market and there are more buyers than there are houses, you have a lot less power. There are plenty of buyers competing for relatively few houses, which means that you may have to pay above the asking price and you don’t have much bargaining power. The good properties will get snapped up quickly too, so you will have a much harder time finding the perfect house.

Before you rush into anything, speak with a local real estate agent about the current state of the markets. They will have a better understanding of recent trends and they can advise you about the current state of the housing market. If you are willing to wait a while, you may have a much better choice of properties and you may also be able to negotiate a lower price.

Is It The Right Time In Your Life?

It’s harder than ever for people to save for houses, which has led to a lot of people thinking that they should get on the ladder as soon as they possibly can. But even though it’s good to get on the property ladder sooner rather than later, you also need to consider how buying a house fits in with the rest of your life.

Say, for example, you are just starting a new career and you are likely to relocate a few times over the coming years. Is it really a good idea to buy a house right now? Selling and buying houses is a time consuming process and it’s expensive as well, so if you are likely to be moving a lot in a short space of time, renting may be best. On average, it is best to stay in a house for at least 5 years before selling it, so if you can’t commit to that, it’s best to wait.

You put everything you have into buying a house, so it’s not a decision you should take lightly. Before you do anything, consider these factors so you can work out whether it is the right time to buy your first home.