7 steps to happy homeownership

What's the secret to becoming a happy homeowner?

Englishmen think it is their castle, while romantics, predictably, believe it is where the heart is. Others -- notably Ikea in its latest ad -- claim it's "the most important place in the world", but for some, well, it's only bricks and mortar, isn't it?

However you define it, at the end of the day, your home is likely to be your biggest financial asset. When times are good, and house prices are going up, that asset can provide you with wealth and security. But when the economy is slowing and prices are predicted to fall or stagnate, owning that asset can be a heavy burden to carry, both financially and emotionally.

But it's not all doom and gloom. The secret to a lifetime of happy homeownership comes from having peace of mind that, should the worst happen to you or your home, you and your family will be able to cope.

And the good news is, you don't have to pay a high price for this peace of mind. Here are seven easy ways you can protect your home, while keeping costs down:

Buildings insurance

If you have a mortgage, your mortgage lender will require you to have adequate buildings insurance in place, as this covers the cost of rebuilding the property if it is destroyed. But do not make the mistake of assuming you are obliged to take out buildings insurance with your mortgage lender. According to the Post Office, almost five million mortgage borrowers lose a combined £600m every year, because they buy their mortgage lender's insurance products instead of shopping around for a more competitive deal.

Contents insurance

Contents insurance can vary greatly, firstly by what is covered and secondly by how much it costs. The best policies offer unlimited cover. This means you do not have to estimate exactly how much each of your belongings is worth. As I explained in Avoid These Insurance Traps!, this will not only save you time and hassle, but it will also eliminate the danger that you will caught out by 'averaging' -- where the insurer decides you have under-insured your possessions, and refuses to pay out your claim in full.

This could potentially save you thousands of pounds in replacement costs.

Sort out your life insurance

John Fitzsimons looks at how to shave years off your mortgage, and cut down just how much you fork out in interest

If you die and your family relies on your income to pay the mortgage, your property could be repossessed by your mortgage lender at the worst possible time. So make sure you have life insurance in place.

Many homeowners opt for decreasing term assurance, where the cover you receive reduces over the term in line with your outstanding mortgage debt. This type of cover can be a lot cheaper than level term assurance, where the amount of cover remains the same throughout the term of the policy. It is also worth checking whether your employer offers life cover as a benefit.

For a great guide on life insurance, have a read of The worst mistake of your life.

Protect your income.

How long would you be able to pay the mortgage for if you became disabled or seriously ill? If you want to protect your income, there are two main ways to do it. One option is to take out critical illness insurance, which pays out a lump sum if you suffer from one of a (usually very small) range of specific, serious health problems.

Emergency cover

This is an extra area of cover offered by lots of the big home insurers nowadays, but you can also buy it separately from Homecall+. You are usually covered for the cost of emergency repairs up to £500 and provided with reputable tradesmen to carry out the work immediately. Here's to a stress-free life!

Saving for emergencies

It's always a good idea to build up a savings nest. Try to put aside at least two month's salary in an instant access savings account, which you can use as an emergency fund if you lose your job, the boiler breaks down, the roof caves in or a tornado rips through your property.

Time to remortgage

Whether you? are coming to the end of a fixed, discount or tracker deal period, or you want to protect yourself from the inevitable future interest rate rises, now is a great time to remortgage. You can use our innovative mortgage centre to search the market yourself, or you can use it to get in contact with our experienced mortgage team who can give you advice and guidance absolutely free.

Finally, remember to budget. As a homeowner, it's vital you keep track of your incomings and outgoings. It's no coincidence, after all, that the word ‘thrifty' and ‘thrive' have the same roots. And the new year is the perfect time to start getting into good habits... no excuses now!

This is a lovemoney.com classic article, originally published in December 2007 and updated