Buying a property is a big step for anyone, and we’d like to make sure you know what’s involved at every step.
Take some time to think about what you spend money on each day, and add a budget for holidays, new clothes etc., after all you don’t want to commit to a mortgage and then realise you can’t afford some of the finer things in life and are now stuck in your lovely new home eating baked beans! Use a Budget Calculator can help you work out what you may be able to afford on a new mortgage.
Once you know what you are able to pay back on a mortgage each month you can use a Mortgage Calculator to find out what total mortgage amount your monthly payments could represent.
Next, you need to work out your one-off moving costs and factor those into your plans.
For most people buying a property, the biggest ongoing cost is the mortgage (simply a loan secured against a property). You can’t sell the property without paying off the mortgage first and if you don’t keep up the repayments the lender can repossess the property.
We don’t need to tell you I’m sure, but it is vital that you secure a mortgage with a lender before starting the searching process. We’ll work with you to find the right property, so having your mortgage agreed in principal will stop you being beaten to it by another buyer and you will also be in a much stronger negotiating position.
Generally, the best mortgage deals are available to people who put in at least 15% of the property’s value, leaving the mortgage company to lend the other 85%.
If you put in less than 10%, you may have to pay a “Higher Lending Fee” (sometimes called a Mortgage Indemnity or a Mortgage Guarantee Charge) which will add to the cost of your mortgage. As a rough guide, providing the amount you are borrowing is at least 85% of the property value, budget to add 1.75% onto the Bank of England base rate, which will give you a ballpark figure of the likely annual interest rate.
Give us a call or drop by our office for a coffee and a chat and we can answer any other questions you might have before you start looking.
