3 QUESTIONS TO ASK BEFORE YOU GET A HOME LOAN
Photo by Precondo CA
Getting a home loan and purchasing a new property is a very exciting step, no matter whether it’s your first property or fifth. It means that you’re making an investment that will hopefully be with you for years to come. It’s a big financial investment, but there’s also a huge emotional component especially if it’s where you plan to live. If you’re thinking about getting a home loan, here are my top 3 questions to ask yourself before you sign the dotted form.
1. Is It The Right Type of Loan for You
If you’re younger, say in your 20s, the type of home loan you will go for will be quite different to someone who’s 55 and wants to retire a few years later. The younger you are, the slower your repayments can be. You’re going to want to make sure you’re paying your mortgage back as fast as possible as that will dramatically reduce the amount of interest you pay, too. There are so many different types of home loans that it’s worth spending a few days checking out all the options to see what will suit your needs the most.
2. Are You Planning for the Unexpected?
Life is unpredictable, that’s what makes it amazing and crazy. But that can also make it a little scary when we’re taking out finance, as we have no idea what the future will hold for our careers and lives. I suggest having an emergency fund that can act as a buffer in case anything comes up. You’re going to want to aim for as much of an emergency fund as possible, but I think anything is better than nothing. I would suggest starting with a month’s worth of expenses and ideally building it up to 6 months worth.
3. Are You Keeping Your Mortgage As Small As Possible
The smaller your mortgage, the faster you can pay it back and get your home freehold. Many people tend to think about a default 30 year term, but what would it cost to pay off your home faster, like in 20 years? What kind of financial freedom would that afford you, not having to make those monthly payments for an extra decade. The smaller your principle loan, the easier it is to make that happen. Only borrow what you absolutely need and it will make all the difference in the long run.
Buying a new property is an exciting move and something that should be celebrated. Following these three simple tips will help ensure you’re buying in the smartest way possible.