When to Mortgage a House: Find Out if You are Ready?
One of the most exciting times in life is when you buy your first house. This is not just a house. This is a home for you and your spouse, where you are going to raise your kids and their memories will remain there for a long time to come. Picking and buying the first home is a very taxing experience and some people go crazy from it. However, remember that there is always the option of renting instead of purchasing a house right away. There is nothing wrong with renting. Now, if you do not want to rent a house for your entire life, you would want to make an investment in real estate and into a house. You do not have to rush this purchase but how do you know if you are ready to buy a home? Here is the formula to assess that.
- Make sure that you have at least 10 percent or preferably 20 percent savings for the down payment.
- You always have the option to take a mortgage loan from a trustworthy bank or financial institution in Singapore at reasonable interest rates. Get a mortgage loan with interest rates suitable to your own budget. Spend some time comparing home loan rates in Singapore before making your decision.
- Go for a shorter tenure to become debt free as soon as possible. And because, on a longer tenure mortgage, you will have to pay a whole lot more money through interest rates. For instance, if you go for a $240,000 mortgage with 3% interest on a 15-year tenure, you will be required to pay around fifty-eight thousands ($58,331) in interest but if you go for 30-year tenure mortgage, you shall be paying close to one hundred and twenty-four thousand dollars ($124,265) in interest.
- Make sure your monthly payment is no more than 25% of your take-home pay. It might sound a bit conservative for many but this is really essential, because it would put you in a position where you can afford a home. Even if something unforseen happens, your dream house is not going to become a curse, rather it should be accounted for as a blessing that you always wanted. So, be smart when you’re buying a house. Look at your finances and to make sure you are ready to buy a house. If your finances are not in order, keep it as a future goal. You do not want to run the risk of being unable to handle your monthly payments. There is the option to refinance housing loans in Singapore, but it is a troublesome process.
- Another important factor in deciding to buy a home is to assess whether you are able to stay put at least for 3 to 5 years. Some financial planners even recommend to go at least for seven years.
- Last but not the least, it is not important that your first home should be as big as that of your parents’ home. You may not need all these spare bedrooms. To grow your family, start out in a house that you can afford and maintain easily. It should give you a joyous time instead of being stressed over financing a huge home.