BUYERS BEWARE
From potential mortgage problems to stamp duty, purchasing your first home can be daunting
IT’S completely normal if the thought of buying your first home fills you with equal parts excitement and terror.
Getting a mortgage is a serious commitment, and buying property is often rife with unforeseen costs, no matter how carefully you plan.
But the rewards of owning your own place can make it all worthwhile.
In this guide, we run through the key questions you should ask yourself to help you work out whether you’re ready to become a homeowner.
QUESTIONS TO ASK YOURSELF BEFORE BUYING A PROPERTY What are house prices doing?
FOR obvious reasons it’s better if your property increases, rather than decreases, in value after you’ve bought it. Unfortunately, the market can be hard to predict: at a national level, prices are climbing again after the recession, but the local picture can be very different, with markets sometimes behaving differently street by street.
Ideally, you should try to buy at a time when prices are low but showing signs of rising. Talk to local estate agents and look at sold prices on the Land Registry website to get an idea of what’s happening in your area.
How will a lender view my employment situation?
MORTGAGE providers require proof of your income to decide whether and how much to lend to you. Some lenders will only give mortgages to people in permanent jobs, so if you’re self-employed or on a fixed-term contract, getting a mortgage may be more difficult.
Do I have a good credit history?
A GOOD credit history is key to a successful mortgage application. This can be a problem if you’ve never taken out any credit. One step that everyone should take is registering on the electoral roll.
Have I saved up a decent deposit?
WHEN we surveyed 1,990 recent home movers in 2015, we found that a third of first-time buyers had to save up for more than three years to buy and just over half needed help from family.
You’ll have access to better mortgage deals, if you can save up a decent-sized deposit. Help to Buy Isas are specifically designed for first-time buyers, and saving in one entitles you to a 25 per cent government bonus on your savings (up to a maximum of £3,000) when you buy your first home.
Could a government scheme help me buy sooner?
IF SAVING up a big deposit seems like a distant dream, schemes such as the Help to Buy equity loan and Help to Buy mortgage guarantee may help you buy a property with a deposit of as little as 5 per cent.
What will my monthly mortgage repayments look like?
THE numbers involved with buying a house are so big it can be pretty hard to understand what they will actually mean for your everyday finances.
When you’re looking at mortgages, try to work out what your monthly repayments will be as accurately as possible – and how they might change if interest rates went up.
Will I be able to afford the repayments?
PLANNING a budget carefully will allow you to work out how much you can afford to spend on mortgage repayments each month so you can be confident you can afford them, both now and in the future.
How much will my monthly bills cost?
IF YOU’VE been renting from a decent landlord, you won’t have had to worry about the unexpected costs of major repairs and maintaining appliances.
But when you own your own home, all this will be your responsibility, and it’s extremely important that you set money aside for unforeseen costs such as repairing a leaky roof.
What are the hidden costs?
YOUR mortgage deposit is just the start: buying a house or flat is extremely expensive.
You’ll need to factor in stamp duty and survey fees, among other things.