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There are certain circumstances and events that you should think about when deciding how big a loan to take out.

  • Do you think that you will be on a much higher salary in May be eight or 10 years time.
  • How safe is your job? Do you live on bonuses and overtime to help pay the mortgage, and how certain are you that you will still be getting this extra money over and above your basic pay for the next few years.
  • If you are a self-employed person, you should be able to find a mortgage lender who requires business accounts for only the last year as proof of income. Lenders in the past have required at least three years accounts, and they had to be signed by an accountant. There may be lenders offering to base your mortgage on self-certified income. Be careful here and look at the interest rate and also the small print, it is often the case that this type of mortgage costs more.
  • Do you know when you might need to replace a major item such as the car.
  • What about the children. Are you thinking of a private education for the children. When will this start and how much will it cost?
  • If you are part of a couple, do you need both of your incomes in order to keep up mortgage payments. If this is the case then what happens if extra domestic responsibilities appear, not just children, but maybe elderly relatives who become dependent on you.
  • If you are a couple, are you both in good health. If one of you becomes very ill, it could affect both of your jobs.
  • How secure is your relationship. This is one of the most common causes of default on mortgage payments. You might think that because things are okay now, they will be okay in the future. Buying or selling a house is a very stressful event, and has caused couples to break up.

When you have thought through all these things, then you should choose your house on the basis of how and where you want to live, provided that you can afford it. You should not buy your house as a growing investment. If you buy a house that you enjoy living in and can afford, then it doesn’t matter if house prices rise or fall, you will have a home that you are happy in.