Home Purchase

Home Purchase

Life Assurance. Sickness and Income Protection. Mortgage Repayment.

Having worked for a period of time to accumulate savings or home deposit or be the beneficiary of a family gift, the purchase of one’s first home/apartment/flat is quite a thrilling experience.

It indicates maturity, independence and financial progress.

Having assumed that the home purchase is affordable, as is almost certainly the case in these days with such stringent lending criteria, the priorities now turn to Protection and Investment.

This will be the first ownership of a real asset and one needs to have a plan to;

Repay Capital

You have two simple choices. Select a Capital and Interest Repayment mortgage, which reduces the loan outstanding to nil over the term or build a capital repayment sum through investments such as ISAs, Unit Trusts, Stocks and Shares and even Pensions. The latter is clearly a more risky approach but it does have certain potential advantages in tax, flexibility and leveraging.

Protect income

Now that you have a real asset for which you are entirely responsible, one must consider how to protect this ownership.

The threat comes in two forms;

  • Inability to repay loan and interest payments prompting one to build and hold an emergency cash surplus to support redundancy or similar.
  • Inability to earn or work through serious illness or accident and even Death prompting one to build supporting insurances such as Permanent Health Insurance or Life Assurance and Critical Illness cover. Although these protections may be available in some form through the Employer they can be limited.