First Time Buyer
How much can you afford?
Before taking out a mortgage you need to make sure that you can afford the mortgage
payments and associated costs. Talk to your mortgage lender they will help you
to work out how much you can afford to borrow. This amount will be worked out
by your income. Generally, your monthly mortgage repayment should not be more
than half your monthly income after tax. You can usually borrow up to three
times the amount of your annual salary. Don't forget other costs, legal, valuation
and survey fees, removal costs etc..
What is a mortgage?
A mortgage is a loan secured against your home. Because your home provides a
high level of security, lenders are willing to give you a lower interest rate
than other types of loans. If you sell your home, the loan will usually be repaid
to the mortgage lender first and you will receive any money left over.
Special mortgage rates
First time buyers can sometimes attract special mortgage terms so ask about
these when discussing your mortgage.
Choosing a mortgage
There are lots of different types of mortgages on the market be careful when
choosing one. Shop around for the best prices. Many first time buyers opt for
a fixed rate loan as well as the traditional variable rate option. (Variable
goes up and down each time bank base rates change). Fixed rate loans won't change
for a certain length of time, usually three to five years.
You will need a deposit
You will need to pay a deposit of at least 5% of the price of the property.
This will have to be paid when you exchange contracts.
Proof of income
Most lenders will require your last three months pay slips. If these cannot be found the lender will usually check your details with
your employer. If you are self-employed, you may need to show your last three years trading accounts.
Visit an estate agent
Contact local estate agents and ask to go on their mailing lists First time
buyers are ideal customers because you don't have a property to sell. Remember
it is the seller that has to pay the agent not you.
Find a Solicitor
Shop around for the best quotes. You could hire a licensed conveyancer to do
the legal work.
Make a wishlist
A wishlist will help you decide what you are looking for and what you want from
your property and stop you buying a home you don`t really want.
Open your eyes
When inspecting a property look past the wall paper and the nice garden look
at the structure of the house. Is the roof leaking, are the electric's safe.
A seller won`t tell you what needs doing unless you ask. Use our maintenance
checklist to tick off the structure of the property.
If you have found a home you like visit it a few times
At night, in the rain etc.. this will help you see what the area is like and also if the
drainage and roof is in good condition.
Check the the neighborhood/surrounding areas
Make sure it has all of the facilities
you might need i.e. doctors, public transport, school etc...
Read between the lines
What's the Annual Percentage Rate (APR) which shows what you pay for borrowing
all the money in the deal, including the "hidden" extras such as valuation,
arrangement and legal fees.
Moving on
Moving can be a very expensive business. If you can't do it yourself then shop around for a
good deal or ask a friend if they can help they will be cheaper then using a
removal firm. If you do use a removal firm pack your own boxes. If you do decide to use a removal firm, it is essential to check
that your goods will be insured in transit.
Double check completion arrangements
Check with everybody... the sellers, your lender and your solicitor about a week
before you are due to move that everything is going to plan.
Other costs to bear in mind
Solicitor's fees
Survey fee
Removal costs
Building insurance
Contents insurance
Mortgage payments protection insurance.
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