Frst
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 and your
most recent P60. 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
that the neighbourhood/surrounding areas have all 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 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
Stamp
duty if the purchase price is over £60,000
Survey
fee
Removal
costs
Building insurance.
Contents
insurance.
Mortgage
payments protection insurance.
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