Ready to buy your next home? Buying property is one of the biggest financial commitments you’ll ever have to make, so make sure you’ve taken everything into consideration before you make your move.
Work out how much you can afford
Knowing how much you can afford to spend will help to avoid setting yourself up for disappointment. You don’t want to set your heart on your dream property, only to realise it is beyond your reach.
Gone are the days when you could work out how much you could afford just by multiplying your salary – if you are planning on getting a mortgage to buy a property, the loan you are able to get will depend on a number of factors. Yes your income is important, but also any expenditure that you have each month. So if you have any regular financial commitments such as car finance, credit card payments, school fees etc this will all be taken into consideration.
Have a deposit saved
A deposit is typically 5-10% of the value of the property you wish to buy so you’ll need to make sure you have this saved in advance. Offering a down-payment gives you instant equity in the property and offers security to the lender. The larger your deposit may also give you access to lower interest rates, so it’s worth trying to save as much as you possibly can in order to try and lower your monthly repayments.
Know your credit rating
A mortgage is easier to get if you have a good credit history – but how do you know if yours is good or bad? Well before you even apply you can check your credit score online for free using one of the credit agencies. Missed or late debt payments, too many loan applications in a short time or even a lack of credit can all have a negative impact on your score. Read our guide on how to improve your credit rating before getting a mortgage.
Speak to a mortgage broker
Whilst you may be able to get a good idea of what you can afford by using an online mortgage calculator, you’ll be able to get a more accurate picture by speaking to a mortgage broker. There are so many mortgage products on the market that it can be a bit of a minefield knowing what you may or may not be eligible for. If your application is denied, it’s not going to do your credit rating any favours if you keep applying – a mortgage broker can advise you which are the best mortgage deals for your circumstances so you have more chance of being accepted.
Get an agreement in principle
When it comes to putting an offer in on your dream home, you’ll want to move quickly. If you meet the eligibility criteria, then most mortgage lenders will be happy to offer you an agreement in principle. Having your mortgage ready to go will show the seller that you are serious about buying, and can be useful if you are competing against other buyers for the same property.
What do you want from the house?
We’ve taken a look at all the financial aspects you need to know when you buy a property but we mustn’t forget the actual fun part! When it comes to looking for a property there are so many things to consider. Is the location right? How many bedrooms? Will it be easy to sell on in the future? Does it require much improvement?
Make a list of everything you want from the property to give you a starting point. Using online property sites such as Rightmove and Zoopla will allow you to filter through options. Try to be realistic – you may not find your perfect home so you’ll need to decide what you’re willing to compromise on and what you can’t live without.
Good luck with your house hunting – for more information on buying your first property you can read our detailed guide on Becoming a First Time Buyer.
The above post does not constitute advice – financial, legal or otherwise. The information within this article is the author’s own opinion and do not necessarily reflect the views of SO Media or So Smart Money.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.