Your home is part of your overall wealth portfolio. If you’re about to buy or do not own your property outright, you should take steps to ensure that you can always cover those mortgage payments.
Buying a house is one of life’s major decisions. Since the 1980s, property prices have rocketed – especially in the cities. Many investors now have bricks and mortar as part of their portfolios.
For people looking to get on the property ladder that means additional pressures. Here are four key areas we think you should consider before committing to probably your biggest investment:
Budget and plan before buying
Establishing sound financial footings is just as important as any building’s foundations. The planning should begin long before you make that big-ticket purchase.
Budgeting is vital. What you can afford today might be very different tomorrow. Personal circumstances change, the bills you pay can go up or down, and your income might fall.
Make sure you know exactly where you stand, now and after a potential move. Log all outgoings and check what costs will be incurred when you switch to your new home.
Avoiding the unexpected is key if you want to avoid financial pressures.
Start saving!
You are probably struggling to get a decent deposit together. Additional savings are the last thing on your mind. They are, however, essential.
A contingency fund is always useful when you set up a new home or move to a bigger property. It’s there if essential services fail, or if household items break down.
Also worth considering, a savings pot can be an excellent cushion if your income falls or you get made redundant.
Look into the future
We’re not recommending crystal balls, but considering what might happen to the property market and interest rates over the next few years are worth your time.
There are always trends to analyse, and more data is now available to help you and independent financial advisers make better decisions.
Take London, for example. House prices slowed, stalled and in some cases started to reverse. If this is the case in your area, it might be worth hanging on until a clearer picture emerges. Otherwise, you could find yourself in negative equity from the beginning.
Looking at interest rate expectations can also help you plan. What does the Bank of England predict for the following quarter or year? Are interest rates as low as they can go?
If you take a base rate mortgage, or a discounted rate to begin with, and you might find that interest charges rise after the first year. Could you afford this?
Take out insurance cover
Before you look at insurance products to cover those unexpected incidents in your new house, look at your income and lifestyle.
Key things to consider are the building itself which is the main asset, but also your work and lifestyle. Take out insurance to cover against redundancy or long-term illness.
Being able to plan into the future with these things covered will give you peace of mind.
Need to chat about mortgages?
We’ve handled mortgages for business and personal clients for many years. We’ve seen markets rise and fall, so we have a wealth of experience to pass on.
The objective will always be to help you find the mortgage that suits your lifestyle.
Any one of the Logic Wealth Planning team will be delighted to point you in the right direction. Just call 0808 1234 321 or email info@logic-wp.com and we’ll get that financial health check started.
Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.