I own a property in the UK that I bought alone a few years ago. Even though I had a boyfriend at the time, he had no interest in co-signing and I didn’t have much interest in getting him on board. Not that I didn’t love him at the time, but I knew it was not a property that would be good for us as a couple, as we had no long term plans in that city and I was buying something to hold for the long term.
For as much as I wanted a comfy place to call home for the near future, I also bought it thinking about its rental potential once I moved away, because I knew I would. It worked out great, but buying a house alone is no small decision.
It is just you and the mortgage
That was not entirely true in my case as the boyfriend was paying a fraction of what we used to pay in our previous rental, and I took roommates as well. But if your plan is to live alone, you can only rely on yourself to pay the mortgage. Can you comfortably afford it? What happens if you lose your job, how long can you keep paying your mortgage with your savings?
I am not a fan of emergency funds, but if your job is unstable by nature (freelancer, contract worker), or if your company is not doing so great and there is a small chance you may get fired in the next 2-5 years, you want to have enough to cover the mortgage while you look for another job. Some mortgages also offer job loss insurance that allows you to delay payments until you get a paycheck, and disability insurance if you become unemployable. Read the details carefully so you know what you are in for.
Where are you in life?
As I said, when I bought, I was in a relationship that ended a year later. You may move in with your significant other and then be left alone to pay the full mortgage. Or you may be with someone who might get a promotion and be sent to another city in a few years. If you decide to follow along, the last thing you want is having to resort to a short sale because your circumstances change.
If you relocate somewhere else, or if the place is not big enough to accommodate your future family, what will you do with your property? Can you take the risk to turn it into a rental and then proceed on paying a second mortgage for your main residence?
Is your mortgage cheaper than rent?
Taking on a mortgage is a huge commitment, but in some areas, it is cheaper than renting, and that is probably why you are considering home ownership. If that is not the case, then the mortgage, taxes, repairs and maintenance fees will take a bigger part of your take home pay each month.
That means maybe not travelling as much as you used to, or not eating out as frequently as before. Are you ready to sacrifice that? If you are single, you probably have a vibrant social life that does include a lot of going out. Will putting that on pause affect your dating life? There are a ton of frugal dating options, and now you can entertain your friends at home, but that means a change in lifestyle.
If your mortgage is a little more expensive than it ideally should be given your budget then you can always consider ways to utilise your house to boost your income. You can rent out a spare room via the hugely popular Airbnb and if you have a front drive then you can also rent that out.
Which mortgage will you go for?
As a single person, I think going for a fixed rate mortgage offers added security. As you progress in your career, you should be making more money, and every year the percentage of your salary dedicated to housing will diminish. However, you may be missing out on lower rates on adjustable mortgages. That is again a risk/reward scenario that you need to think about. Can you afford the mortgage if rates go up 5 points? That may happen. Mortgage rates are pretty low at the moment so fixed rate may be the safest way to go.