Most of us dream of owning our own homes at some stage in our lives. The idea of getting the keys and moving in is incredibly exciting. But can you really afford to buy a new home? Sadly, the process of buying is convoluted, and there are lots of additional costs to consider. Here are some tips to help you decide whether or not it’s a good time to buy your first home and move to pastures new.
Saving a deposit and getting a mortgage
For many people, saving a deposit is hard work. If you’re paying rent and bills every month, it can be tough to put money aside. In the wake of the recession, many lenders require larger deposits, so reaching the target is even harder. Nowadays you usually need at least a five percent deposit, all lenders are different though, and it’s always worth shopping around. Most of us can’t afford to buy a house outright, and this is where being able to get a mortgage is vital. There are different types of mortgage, and the value and term vary in each case. If you want to take out a mortgage you have to fill in an application form and work out what you can afford to borrow. It’s likely that you’ll be paying off a mortgage for many years, so make sure you can cover the repayments.
Your credit rating
Your credit rating will affect how much money you can borrow, and whether or not your mortgage applications are successful. If you have a poor credit rating, you may find that many lenders turn you down. However, there are firms, such as First UK Mortgage Brokers, which specialise in bad credit mortgages although if you’re already in debt think carefully about borrowing even more money. If your rating is a little lower than average there are ways to boost it over time. Make sure you keep up with bills and rent payments, pay off outstanding debts and loans and use your credit accounts frequently while ensuring at least the minimum payment is covered each month.
Additional costs
When you buy a new house, it’s not as simple as paying the offer price and then moving in- unfortunately here are additional fees to consider too. You’ll probably need to pay stamp duty and legal fees as well as agent costs. You might also need to think about repair and renovation work, the cost of moving house and general maintenance. When you’re budgeting, make sure you factor in extras and leave a contingency budget. Read the survey notes very carefully. If structural or plumbing work or rewiring are required, this can be incredibly expensive. Buying a home is an exciting opportunity, but it can be very stressful too. Before you start looking at properties, ask yourself if you can afford to become a homeowner. Can you afford the repayments for years to come? Do you really want to borrow more money? Do you have savings available to cover additional or unexpected costs? It’s always a good idea to do some research first and seek professional advice.
