Buying your first property is both exciting and daunting. The prospect of being tied into a mortgage is a scary one, but if you are in a financially stable place, there is no reason why this should be a scary prospect. If you are considering buying your first property, then there are some things that you need to know:
Budgeting
Budgeting is imperative before you embark on the road of being a property owner. You may need to make cutbacks to your lifestyle. For example, eating out is great, but it isn’t essential. You need to take a look at your finances before you decide to buy a home. Look at your income and compile an income and expenditure. You need to determine how much you spend on luxuries and what you spend on essential items. If you are overspending, now is the time to get your finances in order. Being savvy with money is imperative. When you are planning on buying a property, your finances may be investigated by your mortgage provider to determine whether you are a viable prospect for loaning. In this instance, you need to prove that you are a worthwhile candidate so taking account of your financial affairs is important.
Are You Ready to Buy?
Becoming a homeowner is a long process, and it can be a confusing one. Before you become a homeowner, you need to ensure that you are ready to do so, lest you face substantial financial difficulties along the way. Ensuring that you are ready to become a homeowner is critical. Let’s take a look at what you need to do before you take out a mortgage.
A substantial deposit: You are going to need a large deposit before you can purchase your dream home. Typically, you will be expected to have 20% of the purchase price. This is to cover the initial deposit, as well as fees that are incurred from seeking the advice of mortgage professionals and solicitor’s fees.
Savings: You will need to prove to your lender that you have a good track record of saving money. After all, you need to prove that you are a viable loan candidate, not a risk. You will need a solid track record of employment and a history of regular savings in your account. This will make it significantly easier for you to get a home loan.
Pre-approval for a loan: Ensuring that you can pay the loan back is important to your mortgage provider. What is more, you need to make sure that you can pay your loan back once your home loan has been approved. Checking out the finer details is so important, to ensure that you do not face financial hardship.
Additional savings: It would seem that you need a never-ending pot of money to ensure that you can secure a home loan, but this isn’t strictly true. Additional savings act as a buffer if interest rates rise, thus ensuring that you can afford to pay for your house. The road to becoming a homeowner is long, but it is certainly worth it.
Help is at Hand
While it can seem that the odds are stacked against you when you are planning on buying your first property, it is important to know that some help may be available to you, particularly if you are a first time buyer.
Companies such as Homestart provide information, support and more importantly, financial incentives, for those who are buying their first property. If you need any advice, or guidance, on buying your first property (and in-depth, independent advice) then companies like this should be your first point of call.
Checking out what government incentives are available will help you massively when attempting to buy your first home. Of course, competition may be fierce, and you may not be entitled to any help at all, but it is always worth investigating. Why part with more money than is necessary? This is already a very expensive process to undergo!
Knowing What You Can Afford
As the adage goes, knowledge is power, so it is imperative that you know what you can, and cannot, afford. While the thought of owning your own property can lead to romantic notions and daydreams, you need to remember that you may not be able to buy the mansion first time around. Taking a realistic approach to your financial affairs is important, as is knowing what you can afford.
You will need to look at what you have already saved, in terms of your deposit. You can factor in the applicable first time buyer assistance, should this be relevant and then you can work out how much you can afford to borrow. You will need to ensure that you can figure out how much you can comfortably afford to borrow. If you borrow too much, you won’t be able to eat, which is also important too!
Remember, interest rates can go up and down, so you need to factor this into any budgeting that you make. Keep 5% either side of your budget so you know that you can comfortably afford your home. Do bear in mind that there are a multitude of other costs that come with the privilege of homeownership. This includes stamp duty, legal fees and ongoing costs such as land and water rates and essential maintenance repairs. While these fees are not applicable while renting, they are pivotal to homeowners. What is more, these fees that are applicable to homeowners are often overlooked.
A Home to Call Your Own
Now comes the fun part, once you have your finances in check, you get to shop around for your perfect abode. Of course, you need to be realistic, but you do get to have a lot of fun doing this.
Finding your dream home, and eventually buying it, is difficult and can be arduous. However, the lifetime of enjoyment that you will get from your home is wonderful. Buying a home can feel like a leap of faith, but once you have compiled effective research, as well as seeking out the advice of independent financial experts and the like, you will be ready to make a lifelong financial commitment.
