Purchasing an investment property, especially if it’s your first one may sound like a straightforward matter – but that’s not always the case. So, how would you know if you’re ready for home ownership investment?
Experts suggest a couple of key things that you need to have in place before even considering yourself ready to make the big step.
You saved up enough cash. If you have a solid amount of cash with you right now and you don’t have pressing financial issues, that’s perhaps the most obvious sign that you’re ready to dive into home investment.
A good entry level home will cost you around $500,000, and with present banks tightening their approvals, you will need around $100,000 in cash or equity before you can borrow the entire amount.
Make it a point to check out the latest home loan interest rates before committing. Your choices for principal and interest repayments include fixed rate home loan, premium plus package home loan, premium variable home loan, and others.
You have a good equity in place. Having a good level of equity in your home is an indicator that you’re in a good position to purchase an investment property. Check the amount of equity that your current home has, if applicable.
If you know that you can cover the mortgage repayments and you’ve already built up a good amount of equity, you can then use it to open yourself up for investment properties.
Your numbers stack up. Doing research is a must. This includes research on the property market you want to buy into, plus your own financial capability. You will know that you’re in a position to purchase a home once you exhaustively researched your finances and you’re confident about the numbers.
Make yourself look good to the banks. Look at how steady your employment is, if your living arrangements are stable and if you have bad loans or bad credit debt. Work on any issues you might have.
You can be patient. Sometimes the only way to acquire the home investment you want in a location you prefer. Most people just aren’t patient enough to wait, deciding instead to purchase a home out of whim only to back out later, causing financial burden and other setbacks.
When to buy your home
You should ideally buy a home in the opposite season from the best activities in a location you’re eyeing. Find a tourist area to your locale, or call a hotel and ask when the offseason is. This is usually a good time to buy a home.
Finding the perfect market conditions to purchase a home investment can be hard and risky. You may wait to buy a home because prices went up, but then prices go up further, and you can no longer afford it. If you expect to live in the home for 10-plus years, get a home when you want to and where you prefer, as long as you stick a payment term affordable home loan interest rates.
In any case, affordability must be your number one consideration when looking for a home investment, also, you must be financially and emotionally stable before making this decision. If not, you could get stuck in a home you can’t afford in a city you don’t want to be in.