Buying your first home is one of the most exciting, yet stressful times of your life. A huge financial commitment, it can, however, be very rewarding. Let’s take a look at how you go from renting to being a homeowner.
The eternal question: how much deposit do I need? The answer is as much as you possibly can. The bigger your deposit, the smaller your mortgage repayments will be. You should aim for at least 5% of the cost of a property, but in an ideal world, you’d have 20%.
You should start saving a deposit before you even think about looking at properties.
When you apply for a mortgage, you will be asked stringent questions to determine whether you can afford the monthly repayments. You will be asked to show evidence of your outgoings and prove your income to make sure that you can afford the monthly repayments.
You can use tools like this affordability calculator from the Money Advice Service to make sure that it’s something that you can afford before you begin the process.
The Other Costs
There are other costs to think about when you’re purchasing your first home. You have to pay for:
- Mortgage arrangement and valuation fees
- Stamp duty
- Solicitor’s fee
- Survey costs
- Removal costs
- Initial furnishing and decorating costs
- Buildings insurance
Finding the Right Place
Once you’ve found your dream home, you should view it a few times with someone that you trust. Make sure that you’re methodical and try not to get distracted by things like colour schemes. When you’re sure, you can put in an offer.
There are quite a few government schemes in place, designed to help you get on to the property ladder, such as Help to Buy, Shared Ownership and Right to Buy. You can find details on them from the government website here.
Finding a Mortgage
There are many different types of mortgages to choose from and they are offered by a range of different banks and building societies. Some will offer a variety of mortgages tailored to different people, such as first time buyer mortgages or self-employed mortgages, like Saffron Building Society offers. Do as much research as you can into the different types and talk to a mortgage broker to see which might be the best mortgage option for you.