How to manage your finances when buying a property
Buying a property is a big step forward, and there’s lots of emotions attached, but also lots of practicalities – and it’s one of the biggest financial commitments most people ever make. And when there’s a lot going on, like viewings, negotiations, and paperwork, it’s easy to just focus on the purchase itself and forget about your finances in the long term.
The fact is, managing your money properly during the process makes everything less stressful, and it usually saves you from some nasty surprises later, so keep reading to find out more.
Be honest about what you can afford
It sounds obvious, but this is where a lot of problems tend to start because when it comes to the affordability of buying a property, it’s not just about what a lender says you can borrow – you’ve also got to be comfortable with spending that, as well as everything else you’ll need to afford.
It’s best to factor in mortgage payments, insurance, maintenance, service charges if there are any, and general living costs to make sure you’ll be able to cover it all. Stretching yourself too thin might get you a property faster, but it can make life very tricky afterwards, and ultimately it’s just not worth it.
Budget for the extra costs
The purchase price is only part of the story, and the fact that you’ll need to pay legal fees, surveys, stamp duty, moving costs, and in a lot of cases some immediate repairs and upgrades can take people by surprise if they’ve not done their research. Having a clear budget for all these extras means you don’t be panicking at the last minute – it’ll all go much more smoothly.
If you’re looking at off-market property investment, it’s useful to remember that although there might be less competition, the same financial checks and due diligence are going to apply, and just because a property isn’t widely advertised, that doesn’t mean you can just skip all the financial planning.
Keep an emergency buffer
Owning property comes with some unexpected costs – your boiler might break, for example, your roof might spring a leak, you might be a landlord and your tenants move out, and so on. And no matter what happens or whether you’re living in the property or renting it out, having savings set aside means you can get things fixed quickly.
Of course, nothing’s legally going to stop you from owning a property if you’ve not got an emergency fund, and you might want to risk it because you’re sure nothing too bad is going to happen, but there’s always a chance, and having the money to hand should you need it means less stress and less damage to your big investment.
Think beyond the purchase
If you’re buying as an investment, make sure you look carefully at rental demand, ongoing maintenance, tax implications, and long-term growth potential – it’s crucial to know your numbers. And if you’re buying a home, think about future changes, like job moves, family growth, and lifestyle changes.
If you can look beyond the first year or two, and really consider what might happen, you’ll be in a stronger position when you’re making decisions about which property is best to invest in.
