Have you seen The Money Pit starring Shelley Long and Tom Hanks? The story behind the movie is Walter Fielding and Anna Crowley have to start looking for a new house- but there’s not much they can afford! This soon changes when they meet a lonely old con artist who sells them a beautiful mansion at a ridiculously low price. Only there’s a catch. The second they move into the house it falls apart, starting with the stairway collapsing to the bathtub falling through the floor to eventually the chimney falling into the house! Finally, they have to renovate the house before the frame collapses but the renovations also prove to be a disaster. (source)
Buying a property is thwarted with potential problems, so how do you know your hard earned cash is going to be an investment for the future, as well as a lovely home to live in? Astonishingly people spend more time searching for the perfect pair of jeans than buying a property. Buying a property is one of the biggest financial commitments you will ever make through life, so plenty of thought needs to be given to finding the perfect home.
Most people don’t have enough disposable cash to buy a house outright. Funding options for buying a property include mortgages and loans. Mortgages are designed for the long term commitment required to buy a house and most mortgages can be taken out for 25-30 years. Obviously this is a long time to repay the amount borrowed and interest will accrue. It is therefore essential to choose a mortgage that offers the best interest rates, to do this you could hire the expert services of a mortgage broker like Altrua Financial who will sift through mortgages available and give expert guidance.
To get a mortgage in today’s housing market you will need a substantial deposit. This could take years of savings, or maybe you have a family member who could loan you the money in the short term. To be successful in your mortgage application you also need to be able to prove that you can make the repayments every month. Be prepared for your personal finances to be scrutinized.
Condition of property
There are so many programs on TV showing successful stories of people taking on a renovation project and make a tidy profit, that it’s tempting to follow suit. Unless you are in the building trade and know what you are looking at this could be a huge financial risk. Hidden issues in the construction of a property can be very expensive to rectify. Subsidence, damp issues and roofing problems will require a fair amount of investment.
If the property is in a condition that the mortgage providers feel is too much of a risk, they will refuse to lend the money. Ensure you get a full structural survey carried out on any property you are considering buying. This will give peace of mind in the long run. Of course there are hidden gems to be found, but care needs to be taken before signing on the dotted line.
Make sure you buy a property in a good location. Location is key when seeing your property as a potential future investment. If a property is large and in great condition, but is cheap (remember The Money Pit above?), there will probably be a reason and it could be due to its location. Buy a property in an area which is popular with low crime rate and excellent public transport. If you are savvy you could find out which areas are “up and coming”. There is lots of regeneration work taking place, especially within cities, making the area attractive to buyers.
So to sum it up and put a nice red bow on it – buying a property really is an excellent investment for the future provided you take extra care in your choice of property and do your homework.