If you are reading this, you are probably thinking of buying your first home. But before you take on what would probably be your life’s biggest investment, evaluate the reasons why you are buying a property. Is it because:
– You think buying a property is a way to show that you are grown up?
– Someone told you that once you buy a property you’ll start working for it?
– Uncle Someone told you that you are wasting money on rental?
– Everyone around you is buying one?
– Somebody told you that it’s a buyers market and you will regret 10 years down the line if you do not buy a property now?
If any of the above is the reason why you are considering buying a property, you need to stop, take a breather and think again. A person should only be buying their first property when they are:
– Extremely certain that the sole reason they are buying a property is because they want to and not because somebody else told them that they should
– Are financially ready to own a home
– Settling down
– Need a place to live for at least 5 years
The second point above is especially important, especially with the increasing number of bankruptcy cases. Reported recently, the number of bankrupts below age 35 more than doubled in 2015 as compared to 2005, and the number of bankrupts below age 25 more than tripled since 2005.
The largest contributing factors to these bankruptcy cases come from excessive car and property loans, and the inability to service them. So before you even think of buying your first property, you need to first be sure of your financial security.
Here are some questions for you to ask yourself before buying your first property:
– Are you behind on your credit card payments frequently or maybe monthly?
– Do you often need to borrow money from parents or friends to pay off your debts?
– Do you live from hand-to-mouth every month with just enough to pay off your current debts with no savings?
– If you lost your job, will you be able to service your mortgage loan for at least 6 months with no income?
– If you do have savings, will you still have a healthy sum after you buy your first property and pay off the various costs required?
– Will you still be able to save at least 10% of your income monthly once you buy a property?
If you have answered yes to any of the questions above excepting number 4, 5 and 6, then it may be a good idea for you to not buy a property right now.
Take some time to digest this and re-evaluate if now is the best time for you to buy a property before moving on to our next guide.
Next up in the Property Buyers’ Guides will be to learn how much you can afford to pay for your new property.
Diane Foo Eu Lynn, Senior Content Specialist at PropertyGuru, edited this story. To contact her about this or other stories email diane@propertyguru.com.my
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