Buying a house for the first time is one of the most intimidating things many of us will do in our lives. It is a huge step in life, often seen as the final step into adulthood and, without preparation, can easily be one of the most stressful ordeals in our lives. This list should prepare prospective mortgage customers with the basic ins and outs of getting a mortgage.
Before getting a mortgage, before even starting to look at properties, a deposit will always be necessary. In general, putting down 5% – 20% of the total house price is to be expected, so when considering price ranges be prepared to put down up to 20% to save yourself from disappointment.
Budgeting is the most important thing when it comes to your mortgage, overstretching yourself can end in disaster. Calculate how much you can realistically afford to borrow, based on your salary and savings, and try to stick to this amount when looking for a property.
Just as with renting, mortgages come with arrangement fees and these can be as high as £2,500. So it pays to factor this into the equation. It can work out cheaper to choose a mortgage with a higher rate, but lower fee – again, this mortgage calculator can help you to decide. Don’t forget that you’ll also have to pay stamp duty on properties worth more than £125,000.
Be prepared to look at lots of properties before you find the right one – don’t feel as though you need to settle because there are always more properties to choose between.
Shop around estate agents to get the best out of the market, as well as giving you an idea of how much money you should be looking to spend. Cross check similar properties in different areas too, to give an idea what the cost of living is comparatively. You should also research which government schemes can help you with getting your mortgage.
Your mortgage lender will require evidence of your income, and provide information on your outgoings, including debts, household bills and other costs, such as clothing, childcare and travel. This ensures you can still make payments even if your circumstances change unexpectedly. To prove your income, you may have to produce payslips and bank statements.
If you are self-employed, you could be asked for tax returns and business accounts prepared by an accountant going back two tax years.
First-time buyers are often eligible for government funded schemes. There are two options with Help to Buy – a deposit-boosting interest-free loan for those buying a new-build home costing up to £600,000, and a support scheme to encourage mortgage lenders to take on those with small deposits.
You make a payment to the mortgage company each month which is both capital and interest for the duration of the mortgage, in the end, your debt will be cleared, and you own the property outright.
The sums to calculate repayments assume you remain with that mortgage for the entire term. Of course, most people change mortgages or move house – at this point, your balance and repayments will be recalculated.
Although buying your first home can be challenging, taking on board some of the information we have offered in this article should be of help. Remember to do your research, and rely on the experts here at Mortgage Solutions if you’d like advice on a comprehensive range of mortgages.
Mortgage Solutions Barnsley Limited is an appointed representative of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.
Your home may be repossessed if you do not keep up repayments on your mortgage!
We can charge a fee of up to £495 on offer of the mortgage. However, we reserve the right not to charge a fee. The information on this website is subject to the UK regulatory regime and is therefore targeted at consumers in the UK.