Making sure you do end up owning your own home

In the residential property market, the general idea is that you buy a home in which to live and that ultimately you will end up owning it completely, i.e. you will pay off your mortgage in full.  Obviously, there is some nuance to this, for example, people may decide to sell their property during the term of the mortgage and they may or may not choose to move directly into another owner-occupied property, but that’s the basic idea.  The bad news is that even if you do plan to stay in your property and pay off the mortgage in full, there’s no guarantee that you will be able to do so, the good news is that there are steps you can take to increase your chances of paying off a mortgage successfully.

Assume that the effective minimum term of a mortgage is five years

The length of a mortgage term depends on the agreement with the lender, but since houses tend to be big-ticket purchases, mortgage terms tend to be on the longer side (as in a couple of decades or more) to keep the repayments manageable.  Borrowers can exit the mortgage any time they choose by paying back the amount owed – and possibly a penalty as well.  Penalties have to be reasonable, but, in short, if the borrower exiting the mortgage early would cause reasonable damage to the lender (e.g. the lender gave them a special introductory deal), then a penalty may be applied as redress.  In practical terms, the costs involved in moving home are so high that it generally takes about five years to recoup them, therefore it only makes sense to buy (and take out a mortgage), if you are totally confident that you can stay in the property for at least five years.  Please note, that if your Plan B is to let out the property should you wish to leave it then you will need to swap your residential mortgage for a buy-to-let, which is a different mortgage application with different approval criteria and its own associated set of costs.

Flexibility is good so avoid over-stretching yourself

Resist the temptation to “get on the housing ladder” at any cost.  If you cannot afford the sort of mortgage you will need to buy a suitable property, then accept the fact and carry on renting while you increase your savings and/or income.  Remember that owning a home brings responsibility as well as freedom.  If you’re fed up of the restrictions imposed by landlords, you may be tempted to focus on the fact that you’ll be able to do what you like with your own home.  Once you actually own a home, however, you may quickly come to understand just why landlords place restrictions on what tenants can and cannot do with a property.  You may also come to appreciate how convenient it was just to be able to call a lettings agent/landlord and have them deal with problems/repairs instead of having to sort it yourself (or make arrangements for someone else to sort it).

Learn to love insurance

When it comes to mortgages, for most people the most obvious forms of insurance to take out are life insurance, buildings insurance and home contents insurance.  These may be very wise investments (although, as always, make sure you get the right cover for your needs), however, you may want to extend this to income-protection insurance and/or critical illness cover, if you are self-employed or payment-protection insurance if you are employed.  For the sake of completeness, the infamous PPI scandal was related to the miss-selling of PPI, so basically it was a reflection on human behaviour rather than on the product itself, which can be a very useful purchase.

Your property may be repossessed if you do not keep up repayments on your mortgage.


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