FINANCIAL RISKS OF BUYING A HOUSE
Thinking of buying a house? Here’s what you should know
Besides the fact that owning a house is one of the most rewarding things you could buy, property ownership gives you a sense of security that comes from being able to call a tangible entity your own. It is important to be aware of the risks that are involved when you are interested in buying property. This is so you can plan effectively for any challenges that head your way in the process.
Avoid taking on additional debt
When buying a home many people assume that banks only monitor their credit profiles and perform updated affordability checks prior to the home loan approval process. However, this process continues for at least three months until the property registration process is over. So, if you have taken on extra debt or you have defaulted against credit providers, this can result in the bank repricing and in some extreme cases – declining the loan altogether.
Home loan repayment defaults
Buying a house has risks that are largely financial. For one, there’s a risk of not being able to pay off your home loan, either due to bad financial planning, or circumstances that are beyond your control such as unemployment, divorce, or the death of a spouse or partner.
Defaulting on your home loan repayments could incur additional expenses and fees, on top of your existing mortgage amount. This can also tarnish your credit record. Worst case scenario, your home will be repossessed to settle your debt with your financial lender.
Tips on how to clear your debt
Get some help with Debt Consolidation, with over 10 million individuals who are experiencing the financial burden of having accumulated large amounts of debt that they are unable to clear. Debt consolidation is a debt refinancing process, which allows you to attain a single loan that repays many other smaller loans. This is helpful as is consolidates multiple debt repayments into one.
The value of your home
When buying a home you need to take into consideration that the value of the property could appreciate or depreciate over time. This is a financial risk that you will need to take as your property may depreciate over the time that you own it. Most homeowners purchase their properties with the intention of the property value increases over time, and should they sell, they make a profit – but this is not guaranteed. The land that the property is built on is the determining factor for how much the property is worth, as well as the location, supply and demand in the area, and general property market trends.
Tips for the value of a home
Do some research on which locations are in high demand, this applies to property that will retain its value in the future. Properties that are close to amenities such as schools, hospitals, and main roads are less likely to decrease in value over time. New property can also be a good investment as they may see good returns over long term, but this is dependent on other developments that are planned for the area.