Moving into your first home is one of life’s champagne moments, but getting there is definitely not fun or easy. If you are prepared, it can be a little less stressful. As a first-time home buyer, the property market, mortgages and everything between can seem hugely confusing. These are the six things you should know before venturing into the property marketing and purchasing your first home.
#1 Count the Costs
You need to have a clear picture of how much money you’ll need to buy a home. You’ll need a deposit of at least 5% of the property’s sale value. If you have £8,000 saved up, you’d look for a house valued at up to £160,00. In reality, the properties you would consider would cost a bit below your upper limit, as you’d need to be able to cover a whole range of additional costs, including solicitor fees, mortgage fees, survey costs and even stamp duty. These costs will add several thousands of pounds to your outlay, so work out an estimate with them taken into account.
#2 Government Help
If you’ve found it hard to save a large deposit, you could take advantage of a government scheme, such as Help to Buy. There are two Help to Buy schemes. With the equity loan scheme an initial interest-free loan of up to 20% of the value of a new-build property is made available to help you get on the property ladder. The Help to Buy mortgage guarantee scheme was introduced to increase the number of mortgages that only need a deposit of 5%, with more affordable interest rates. For more information about Help To Buy, check out this post.
#3 Pick the right mortgage
It’s easier said than done, but finding the right mortgage for you will be helpful you in the long run. Speak to a mortgage broker or your bank or building society early on in the home-buying process. You will need expert advice on what type of mortgage to opt for. This will based on your personal circumstances and attitude to risk. If you want the certainty of knowing what your monthly payments will be, your broker may suggest a fixed-rate deal, which means the amount you pay each month remains the same for a set amount of years, typically two, three or five years, and sometimes longer.
Fixed-rate mortgages aren’t susceptible to changes in the bank base rate, unlike variable-rate mortgages. With a variable-rate mortgage, the amount you pay each month can reflect any change in the Bank of England base rate. The Bank of England base rate has been at a historic low since March 2009, so if it does change, it is likely to go up.
#4 Shop Around
Take time to research what mortgages are available. Price comparison sites are a good place to start looking.
#5 Ongoing Costs
Once you have moved in, it is important to have a budget in place that takes into account the mortgage, bills and other outgoings. Don’t forget to start saving so that you can cover emergency and maintenance costs as they arise. Money will be particularly tight during the first month or two after moving in. If you stick with a budget, things should start to get easier as time goes on!
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