Arranging to buy your first home can be a combination of exciting and stressful all at the same time, as you try to put everything together from finances to legal arrangements.
Using a law firm like Slater & Gordon will allow you to cover all the legal aspects of purchasing a property but before you get to the point where you are ready to fulfil your dream and collect the keys to your home, there are some financial aspects that need to be sorted.
Getting a deposit together
The dream of home ownership begins with getting a deposit together so that you can qualify for a mortgage pay the difference needed to complete the purchase.
You will need to try and raise at least 5% of the purchase price as a deposit and ideally, if you could manage to save a 20% deposit, this will often allow you to access some more favourable mortgage rates.
As a general guide, a deposit of greater than 5% will give you the opportunity to apply for a wider range of mortgage deals, so consider some strategies to help you achieve this, such as the Help to Buy ISA, which tops up your savings by up to £3,000.
Make sure your financial situation can cope with a mortgage
Mortgage lenders have tightened up their lending criteria and affordability checks, so you can expect some scrutiny from a lender, who will want to know that you can afford to make the monthly mortgage payments comfortably.
Your chosen lender will require you to provide evidence of all of your regular expenditure and income, normally by asking for a set of bank statements, as part of the application process.
You can use a mortgage affordability calculator to get a clearer idea of what you can realistically afford, so that when you come to apply for a mortgage, you will be more confident that your finances will be able to demonstrate that you can afford to borrow the money.
Don’t forget other costs
It can be very easy to get carried away with the excitement of buying a house that you can truly call home, but you will need to work out how you need to complete the purchase, on top of the deposit needed.
At the beginning of the application process, you will need to pay a valuation fee and you might also be asked for an application fee.
The valuation fee will pay for the cost of instructing a surveyor to confirm that the property is worth the price you are paying and whether it is in good condition. Remember that a valuation fee is a basic survey and if you want a more detailed examination of the property, this will cost extra.
You will need to pay stamp duty when you complete the purchase if the property is being sold for more than £125,000 and the amount you pay will rise, the more expensive the property is.
Other costs to consider include removal fees, solicitors fees and any furnishing or decorating costs, if you need to do some refurbishment work.
Sorting out your finances is the key to fulfilling your dream of home ownership, so make sure that you do all your sums.
Maddison Talbot is a real estate consultant who mostly deals with first-time buyers who need mortgage advice. She enjoys blogging in her spare time and offering up her knowledge to those looking to get onto the first step of the property market.