By FRANCIS AYIEKO

In a society where owning your own house has always been seen as the best option, this is a question rarely asked but buying a house can, sometimes, be a bad idea. So, when is buying a house a bad idea?  One such time is when you do it too early in life, before you are financially ready — Not being financially ready does not necessarily mean you cannot afford the house you are buying.

Not to be mistaken with discouraging people from owning a home. However, prudence is important when deciding to get onto the home ownership ladder.

When you want to own a home through a mortgage, do not overstretch. Buy what you can afford and when you can afford it.

Affordability here means you can pay your home loan every month without jeopardising your other financial obligations such as daily family upkeep, paying school fees, taking care of medical expenses, and perhaps paying monthly insurance premiums.

With mortgage firms getting creative with their products, it is increasingly becoming a daily temptation for the middle-class to decide on whether or not to sign up for a mortgage. When someone earning a net salary of Sh90,000 per month, for instance, is told they will need to pay Sh75,000 per month for a mortgage, it can become enticing for them to think they can make a little sacrifice of living on the Sh15,000 balance so that they can own a home.

But the truth is that they might not be able to meet their other financial obligations and may be forced to look for other sources of income, sometimes illegal, to ensure they stay financially afloat.

The thing is, when thinking about taking a mortgage, never forget the time-old wisdom of living within one’s means. This starts with learning how to budget well.

Signs

How do you know you are not financially ready to take a mortgage? Experts say that if you cannot save up for a down payment (usually between ten per cent and 20 per cent) and have to take another loan either from a Sacco or elsewhere to pay for the deposit, then that should be an indication that you are probably not ready.

Remember that when you take a mortgage, you will not only be paying a monthly instalment, but also other associated costs such as insurance, home repairs and, of course, you will have to furnish the house.

The size of the monthly repayments must be manageable. Home loan experts say that if you are spending more than 50 per cent of your income on servicing a mortgage, then you are straining.