Buying a property is one of the biggest financial decisions you will ever make in life. It’s also the most expensive and valuable asset you can have. For this reason, you will most likely have to take out a property loan from an authorised money lender to acquire it.
Before making the decision, it pays to evaluate your own financial situation first. Ask yourself these four questions.
Is your income sustainable?
Property loans are long-term loans, and the monthly dues are often higher than other types of loans. With that, you need a stable source of income to keep up with the monthly payments. Variable or unpredictable income sources are not ideal for property loans. Besides, banks and lenders are likely to disapprove your property loan application if you do not have a stable source of income.
For this reason, make sure you have either a full-time job or a profitable business before applying for a property loan. These will maximise your chances of getting approved.
Do you have other debts to pay off?
If you have outstanding loans, it’s best to hold off on getting a property loan. Focus on paying off your previous loans first. This way, you will not add any excess financial burden on yourself. Remember that a property loan is both long-term and high-value. It’s better to pay off old loans first so you can have enough money to consistently pay down your property loan.
However, in case your budget and income lets you afford a property loan despite having other loans, then go ahead. The important thing is you can pay the monthly obligations for the long term.
Is the property in a good location?
When taking out a property loan, consider the location of the property as well. Is the location near your workplace? Is it near your children’s schools? Is it in a community you want to live in?
If you answered “yes” to all those questions, the property is a good investment. Otherwise, you may want to consider another property in a more favourable location. You don’t want to regret buying property in a not-so-good location in the future. More so if it will be your home – the place you will be spending decades of your life in.
What is the resale value of the property?
Resale value is one of the things only a few consider when taking out property loans. It makes selling your home in the future easier and less stressful if you choose a property that has a high resale value.
If you don’t think you will be moving house at any point in your lifetime, it’s still wise to account for the resale value. You never know what your life will be like years from now. You may change your mind about selling your home due to unforeseen circumstances. With that, it’s best to be prepared.
Conclusion
Consider these four things carefully before deciding to take out a property loan. It’s one of the biggest financial decisions you can ever make, so it’s best to be well-prepared beforehand. Also, it pays to shop around for the best lender who will give you reasonable interest rates and loan tenure.