Steps You Take When Buying Your First Home
How Much Can You Borrow
When buying your first home, it is important to not go above your means. You need to set a realistic budget based on your income and expenses and stick to it.
Research Is Key
Check different estate agents in your local area. This will enable you to get a guideline of the cost of homes you like are worth. You may want to look slightly further afield if it means you can get the right home. Being able to compromise on location is a bonus.
Getting a Great Mortgage
When you are comparing mortgages, it is important to note that some lenders offer schemes to help the first time buyers get onto the property ladder while other banks offer deals for people who only have a 5% deposit.
Most lenders will need a minimum 10% deposit for your mortgage and might charge you if the deposit is less than 25% of the value of the home as the interest rates will be higher.
Putting down the biggest deposit, you can afford will help you to get a better and cheaper mortgage deal as your monthly repayments will be lower. Being patient and waiting a few months to save a bit more can help in the long run.
Making some slight changes to your daily habits can make a big difference in saving faster. For example making your lunch instead of buying out could save you upwards of £100 a month.
Put any savings you have into ISA’s or other government based schemes. If you are prepared to wait a year, you could boost your deposit by as much as £6000.
The government wants people to own their homes and has launched some different schemes to help people buy their first home. An example of this is the “help to buy scheme” where applicants need only a 5% deposit, and the government will add the remaining 20%. This will get you better mortgage deals, and you also won’t pay any interest on the 20% the government added for the first five years.
Putting in An Offer
Making an offer on a property can mean the difference in paying £5,000 – £25,000. You might want to start with a small figure, but you might lose out to someone else bidding slightly higher. You should contact the estate agent to see how long your preferred property has been for sale. This will give you some leverage if the property has not sold for a long time and selling needs a quick sale.
Factor In The Fee’s
Most mortgages will charge an arrangement fee which can be quite high such as £2000. By knowing this, you can factor it in when picking the best mortgage for yourself. Sometimes it can be cheaper to go with a slightly higher interest rate but a lower fee. Look for some mortgage calculators which can help you factor all this in.
Lawyers Cost Money
Once your offer is accepted, you will need to hire a lawyer and maybe a conveyancer. They will take care of all the legal jargon for your purchase and will usually cost £400 – £800.
Hire a Property Surveyor
You will need to hire a surveyor to inspect and value the property. They will highlight any potential problems with the property and might allow you to renegotiate the price. This is an essential step in the process to avoid buying a property which needs extensive work and may cost many thousands of pounds.
Make Sure You Get Home Insurance
You must get home insurance before you move in to protect your purchase and will probably be a requirement of the mortgage lender. To get the right deal make sure you do not insure the property for the price you paid. You should only insure the cost it would take to rebuild.