Buying a first home is a significant milestone that takes commitment to saving, careful decision making, and considered planning. The biggest hurdle for most first home buyers? Saving a deposit. Depending on where you are in Nigeria, it can take as long as ten years to save enough, all the while chasing down rising house prices which means having to save even more! If you are ready to buy your first home, here are a few things to consider.
1. Determine how much you can spend
A mortgage is quite likely to be the biggest debt you’ll ever have, which is why it’s so important to buy right. Deciding how much you have to spend – or more correctly, how much you can afford – will be a major factor in determining the size of your deposit. Most lenders require a deposit of at least 10 to 20 per cent of the purchase price. That can be made up of your own savings, Government grants, and cash gifts from family or friends.
2. Check your credit report
Your credit report is an online record of your credit spending and repayment history. Every time you apply for credit, spend using credit, or make a repayment on a loan, utility bill or credit card debt, your credit score is calculated. Lenders use your credit score to determine how likely you are to default. And when you apply for a home loan, that will be one of the first things lenders will check.
3. Understand the costs
When it comes to buying a first home, many first home buyers are surprised at the extra, unexpected costs they incur. Not only do you need to consider the purchase price and how much your repayments will be each fortnight or month, but there are also a few other costs you’ll need to factor in to your house buying budget.
- Loan fees
- Lenders’ Mortgage Insurance
- Stamp duty
- Legal fees
- Building inspections
- Moving costs
4. Choose the right location
Location, location, location! That’s right, where you buy is often more important than what you buy. To help you decide on the right location, here are some questions to ask:
- How much are properties selling for in the area?
- How far will you be from family, friends or work?
- How developed is the infrastructure in terms of roads, public transport and nearby shops or schools?
- Is there potential for price growth in the area?
- What other developments are in progress or planned?
- What is the crime rate like?
Use online sources, talk to the local real estate company, and research as much as possible before deciding on location.