Can you feel the excitement bubbling? That’s because you’re one step away from calling yourself a homeowner. We don’t want to burst the joy bubble, but if you’re considering a home loan to fund your property purchase, it’s best to take a few things into consideration before you scribble that signature on a handful of sheets.
If you’re feeling the pressure of a loan, it’s because choosing the right loan comes with great responsibility. Luckily for you, we’ve got some tips to ease the process and put you into a reassuring mood.
Check How Much The Bank Is Willing To Lend You
If this is your first time knocking on the bank’s door for a loan, it’s good to know that the extent of a loan is based on your annual income. In basic terms – the more you earn, the more the bank can lend you. Starting your property search before discussing the limits with the bank can raise your expectations unnecessarily. Ask the bank representative to prepare an estimate of the total monthly payment due. Compare it with your monthly salary and take note if it is an affordable rate.
Do NOT Overstep Your Budget
Finding something within your price range is potentially the most precarious situation you’ll face. One word of advice – don’t go looking for lavish palaces if your budget only allows you to purchase a reasonable dwelling. There are some remarkable properties at justifiable amounts. Using a property agent? Instruct them not to consider anything over that price, or else you’ll end up miserable with no solution in sight.
Consider the 10% Down Payment
It’s easy to think that you’ll be able to take hold of a set of property keys just by signing a few papers. In reality, you’ll need to fork out 10% of the property cost as a down payment for the bank loan to be issued. Once you’re opening the cheque book, make calculations of the notary fees and tax amounts you’ll be incurring. Being financially prepared is key.
Factor in Home Insurance
For home loans to be processed, banks would need you to secure a Home Insurance policy. This is the bank’s way of ensuring that, should any loss or damage happens to the property and/or its contents, you as the property owner, would have a reliable Plan B to salvage your investment.
All done? You’re ready to wear the new homeowner badge with pride!