Originally published: 1st August 2022
collaborative post // Choosing to buy your first home is likely going to be one of the most crucial choices you will ever have to make in your lifetime. Are you apprehensive about making your first purchase of a house or apartment? There is no need to be afraid because we have laid out all of the stages for you here.
What can you afford?
It is highly recommended that you consult with a mortgage professional. They will offer you an indication of what you can afford based on your current financial situation. You will need to present them with some documentation initially, which should include the following items:
- Evidence of one’s identity
- Documentation of your current place of residence
- The pay stubs for the past three months’ worth of work.
- The most recent P60 that you have.
As a general rule of thumb, the amount of money you can borrow should be equal to four times your annual gross income. Your mortgage payments will be affected by a number of factors, including the interest rate, the length of the loan, and the initial deposit.
To our good fortune, there are initiatives that can assist in the process of making mortgages more easily accessible. If your credit score is less than ideal, a bad credit mortgage broker may be able to help.
You’ll Need a Solid Real Estate Agent
It’s honestly not just about financing, but it’s about finding that perfect location that you want to invest in. It’s not as easy as just picking any random property; you need to make sure it’s right, you need to make sure it’s worth the work, and you need to make sure that it will be a worthwhile investment.
You can’t do this on your own, which is why you’ll absolutely need to have a professional on your side, such as from MGP Property. So, in general, right after you figure out your financial situation, it’s best to look into a reputable real estate agent that you know you can trust!
Have a deposit ready
In most cases, you will be expected to make a down payment of between five and twenty percent of the total price. That is a significant amount of money, especially considering the fact that you are a renter. Creating and sticking to a strict budget might help you save money for that all-important deposit.
Figuring out how much money you spend per month, taking into consideration significant costs like getting your car fixed, is the greatest place to start when creating a budget. After that, you can determine how much of your income you actually have available for savings and get started putting money away.
Putting your money in a straightforward savings account will achieve the desired results, and you might even earn interest on the funds. Discover the house of your dreams.
Obtaining a mortgage on a preliminary basis
You should have a discussion about the terms of a mortgage agreement in principle with your lender before you start touring residences in person. Think of this as an estimate for your mortgage. You will have a clearer understanding of the kind of mortgage that is most suited to your needs and the amount of money that you are eligible to receive.
Both interest-only and repayment mortgages will be explained to you by your mortgage advisor. Repayment mortgages require monthly payments. Simply said, with a repayment mortgage, you are responsible for repaying the debt.
When you have an interest-only mortgage, the only payment you make is the interest on the loan; yet, at the conclusion of the mortgage term, you are responsible for paying the full purchase price of the property.
Take a look at the house.
The time has come to determine whether or not the residence is suitable for your needs. Bring over a friend so that you can obtain a second view on what you should do. Check the water pressure, feel the walls with your hands to get a sense of how they are constructed, look for symptoms of dampness, and do not be hesitant to ask the seller questions.
If you are satisfied with what you see, you should schedule a second viewing for a different time of day in order to investigate potential issues with the level of noise, traffic, and lighting.
Make a proposal
Make an offer on the property as soon as possible after making initial contact with the real estate agent. If they are in agreement, then everything is good to proceed. However, keep in mind that nothing is final until both parties have signed documents, at which point either side may back out of the agreement.
In the event that they decline your offer, you will likely be required to start all over and take a fresh look at your current financial standing. If it is accepted, it is time to talk to your mortgage provider and get it finalised.