Am I ready to buy a house? Being a homeowner is both scary and exciting, especially as a first time buyer. Let’s help you make a decision.
These 12 signs to look out for will help you figure out if you’re ready to buy a house yet.
Am I Ready To Buy A House?
The very fact that you’re thinking of this question shows you’re at the very least, starting to get ready.
Personally for me, the transition from not ready to being ready is never a single moment. It’s a process of putting things in place to become ready.
Go through this list and analyse your position to answer the question, ‘Am I ready to buy a house?’.
1- You Have Enough Savings
First and foremost, you’ll need some money to actually own a home.
There are various costs associated with buying a house that require you to put up money upfront.
For those of you with enough money to buy a house outright, then this won’t apply to you. However for those without the means to buy a house outright, you’ll need a mortgage.
To get the mortgage, you’ll need a deposit.
Usually, the minimum deposit you’ll need to aim for is 10% of the house price you’re looking to buy.
Secondly, buying a house has legal bits that happen in the background to be a homeowner.
This is where solicitors come in who will take care of that side of things for you. Solicitors fees vary but can range from £800 to £2,000.
Other costs that will need money upfront include moving costs, furnishing, and other fees such as mortgage fees.
If you have enough savings available, it’s a good sign that you’re ready to buy a house.
2- You Have A Decent Credit Score
When you’re wanting to borrow any money from the bank your credit score plays a big part, especially with mortgages.
In reality your credit report is what builds your credit score, and the better your report the better your credit score.
The higher your credit score and better your credit report is, the more options you have with mortgage offers.
More options mean you could negotiate a mortgage with a lower interest rate.
Whereas a low credit score means few options are available to you, or worse you won’t be eligible to get a mortgage.
Having a good credit score is a good sign that you’re ready to buy a house.
3- You Can Afford the Mortgage Payments
Having the savings to get the mortgage is one thing, affording the monthly mortgage payments is another.
Mortgage lenders have a mortgage calculator on their website where you can calculate potential mortgage monthly payments. This will be based on how much you’re borrowing and your chosen term.
I’d strongly suggest you look at these so you get an idea of what you monthly payments could be.
Above your monthly mortgage payments, you’ll also have added homeowner fees like mortgage insurance and home insurance.
You can also calculate projected cost of other bills based on location, house size, and number of occupants.
Ensuring that your budget has room for your potential new cost of living is a good check to ensure you’re ready to buy a house.
We have designed a budgeting spreadsheet for you. It is the Ultimate Money Plan spreadsheet template with everything you need to take charge of your finances and crush your money goals.
4- You Have A Steady Income
Having a recurring income puts you in a position to afford the living expenses.
This can be income from a job, business, side hustles, or social benefits.
Having an income gives mortgage lenders the confidence that you’ll be able to make your mortgage payments.
This in turn increases your chances of getting a mortgage application approved,
Having a steady income also means being able to afford the ongoing costs of owning a home.
5- You Have An Emergency Fund
Having an emergency fund above and beyond your house savings is the ideal position to be in.
This is money you’ve put aside to cover your living expenses should something happen to your source of income.
Technically you can still buy a house without having an emergency fund, but it’s still good to have one.
I wish we lived in an ideal world where you can save up for a house and not worry about anything else.
I know a number of people whose house buying journey has been pushed back due to a life emergency that needed money.
You’re putting yourself in a better position to be ready to buy a house by having an emergency fund savings pot.
6- You’ve Paid Off Your High Interest Consumer Debts
Paying off your consumer debts is highly advantageous before buying a house.
High interest debts typically include credit cards, buy now later deals and loans that have an interest ranging from 10% to 30%, or higher.
Paying off your debts before buying a house enables you to have more money that you can put towards your house savings, plus live within your means.
In addition to that, your level of debts actually impact how much you can borrow as a mortgage.
Mortgage lenders will assess how much you can afford to borrow based on your income and your existing debts.
However similar to the emergency fund, you also can still buy a house whilst in debt.
Paying your debts off puts you in a better position to be ready to buy a house.
7- You Want To Own Your Home
I’ve personally always known I wanted to own my home from my early teens.
I decided that owning my own would be a personal goal of mine which led me to design my life towards reaching that goal.
Everyone is motivated by all sorts of reasons but beyond the money, you have to want to be a homeowner.
Please don’t buy a house to tick a social box, keep up with the Jones’s, or through coercion. This is a big decision and should not be taken lightly.
Whether you’re buying a house by yourself, your partner, or a family member you should enter into this with a genuine desire to be a homeowner.
If you don’t want it then you’re probably not yet ready to buy a house, and that’s okay too.
8- You Want to Build Equity
One of the best financial reasons to own property is equity.
The one advantage ownership has over renting is that your monthly payments are going towards your equity in the house.
Equity is ownership of an asset.
With a house, the mortgage is a liability and the difference between the value of the house and the mortgage balance is your equity.
You can leverage a house as a form of investment where you build equity which you can get when you sell the property later on.
Acquiring assets and building equity go towards having a higher net worth.
If you want to use a house as one of your chosen methods of building equity, then you’re ready to buy a house.
9- You’re Ready for the Boring Life
How we spend our money tells us what our priorities are.
Imagine having to decide whether to buy a new macbook against needing a new washing machine.
Or going in the shops and walking past the clothes section straight to the home section to buy new cushions or cutlery.
Although some may argue getting new furnishings is exciting, I’ve never seen anyone get overly excited about being bought a toaster.
As you’re ready to have some ‘boring’ in your life then you’re ready to buy a house.
10- You Want To Settle Down
Maybe you’re thinking it’s time to settle down, have a family, and stay in one place for some time.
The desire to settle down is good as it shows you’re in a place in your life where you’re happy, comfortable and content with where you are.
I’m generally talking about settling down emotionally, mentally, and physically, although this can apply to being in a long term relationship too.
Having said that it’s unlikely that your first home will be your forever home, however it can be your home for the next few years.
11- You Want Another Income Stream
Buying a house with an investment angle is not just about having equity as discussed before.
You desire to build multiple income streams and use your home property as an option to do so.
You could actually buy a house, stay with your family and rent it out instead of moving in.
Or, you may buy a 3 bedroomed house and rent out the other spare rooms, bringing in a source of income from the rental payments.
There are other ways to make money from your house.
You can rent out your car parking space if unused, rent out garage space as storage, offer your home for photoshoots or filming locations for a fee.
Ultimately, if you’re wanting to maximise your house and are keen to explore other avenues it could be a sign that you’re ready to buy a house for the purpose of making more money.
12- You Feel Ready
I don’t know how you feel when you’re ready but for me I have a sense of an internal compass that’s certain I’m ready.
If after reading the above signs and you still feel ready, then you probably are.
Am I really ready to buy a house because I feel ready?
I say yes. You may or may not be able to verbally express it beyond those words. Some say if you know you know.
For us I remember the day Lindie and I said to ourselves it’s time. We needed no explanation or elaboration, we just felt it.
Maybe you’re feeling the same and have concluded in your heart and mind that you’re ready.
When you feel it in you there’s no need for somebody else to tell you otherwise.
You’re ready.
Am I Ready To Buy A House?
What’s your answer now to your ‘Am I ready to buy a house’ question?
If yes, what steps do you need to take today to make it happen?
If not, what do you need to start putting in place to become ready?
Since you’ve read this far you’re serious about being a homeowner, so don’t neglect your dream and take action.
Take Action
What do you need to do immediately to get one step closer to your dreams to be a homeowner?
Share this with your friend, family, or partner and discuss your journey with them.
Let us know how you’re getting along by getting in touch with us, we’d love to hear from you
Knowledge is powerless without action
So take action, and take care
Thando