Having own roof is the biggest dream of most people dream so that they could sell it at a stonking profit. Buying the property at impressive place is the biggest single investment; therefore, it is important to have accurate idea of total cost not just about the mortgaged cost. According to a report by the English Housing Survey, almost 60 % population is of homeowners; out these, 33 % are outright homeowners. Housing crisis over the years has made the mortgage lenders including regular banks over cautious, therefore, the sources of getting easy to afford loan are shrinking. Thanks to flourishing direct lending market that helps the people in finance need almost immediately in the way the borrowers wish. Despite the rising cost of residential properties, people are investing to own a house but it delivers financial impacts also in parallel to the pleasure of having own roof.
Trending Financial Woes after Buying a Home:
Before going ahead, have a look over some interesting eye-opening facts. The average house costing in was 226 thousand £ in July 2017. The average age of first-time buyers was 30 years. During the first 6 months of 2017, the average price of residential property sold in Greater London was almost 410 thousand £. The key factor that makes it so important to get over the first step of the property ladder is that the monthly cost of home buying is lower than renting. The first-time buyer in London saves 2.2 thousand £ per year on an average over the renting. Yes, such a big investment is a challenge. People take home loans from diverse sources but they face critical problems to manage even the living expenses. Therefore, recovering financially after buying a house is the biggest challenge faced by the majority of homeowners.
6 tips to recover financially after buying a house:
- Build the contingency fund
The financial experts suggest having an equivalent of 3 to 6 months of monthly earning in saving the account. The benefit is that if you lose the job or your earning drops unexpectedly, you will cover the basic expenses including mortgage payments, utility bills, credit card loan instalments etc.
- Reserve money for emergency home repairs
It is different from a contingency fund. It is meant to manage day-to-day expenses. What will happen when if you need a major repair unexpectedly in a house like when the heating system fails or roof starts leaking. The money set aside, at least 2% of property value, to meet out such expenses helps you enjoy the stress-free sleep under own roof.
- Buy life insurance
Buying a house is the biggest investment. Little investment in life insurance ensures that the spouse or dependent family member wouldn’t lose the home in case of sudden death because the insurer will pay enough amount to pay the balance mortgaged loan or other debts.
- Invest for retirement
After fixing the saving and insurance cost, focus on adequate retirement savings. Buying a house is sure to drain out your cash deposits; it is understandable to neglect the retirement saving for the few months but make it as soon you can do it. Investing for retirement age is the long-term objective oriented goal that makes you free from financial worries when the monthly professional earning drops at old age.
- Create the monthly budget
Creating a monthly budget and the habit of following it, in any case, helps you save adequate funds for savings to diverse heads as mentioned above. Home buying changes the financial situation because of new liabilities, therefore, you need to frame a new budget. Make the list of all the monthly expenses and separate it into two parts- essential expenses and optional expenses. Minmising optional expenses for a couple of years is the key to recover financially after buying home.
- Pay the debts on the time
The habit of using a credit card for purchasing often drives you to make the purchases that you can avoid while using just the cash. In addition, paying credit card dues on the time is often neglected; it incurs a high cost that you can avoid. By paying the high-interest rate small amount debts one by one is a good practice to recover your credit score and to save more for other purposes.
Set just reasonable goals to save more. If the saving goals are unrealistic, you may feel failed. Better you sit down with a spouse to decide the reasonable limits of each of monthly routine expense. Regular saving to pay back the home loan at the earliest is the only way to recover financially after buying home.