A Guide to Getting the Best Deal as A First Time Homebuyer
Being a first-time buyer is exciting, but it can also be overwhelming. Fortunately, there is a lot of help available to you – if you know where to look. So, we have created the ultimate guide to buying your first home.
Before you become attached to a beautiful house, create a realistic budget to see how much you can afford. Buying a new house involves a lot more than what you pay for the actual property, so make sure your house-buying budget stems from a livable monthly budget, based on your monthly income.
Start with a livable month-to-month budget, which includes living expenses such as bills and utilities, to mandatory payments like finance contracts, debt repayments. You will also ned to factor in payments like property taxes and any insurances as well as day-to-day things such as groceries and travel costs etc.
Once you have this budget, use it to help determine what you have leftover, or can afford to save/borrow to buy a home. This figure will then help you to work out the minimum and maximum house prices you should be looking at in your search.
Prepare Your Deposit
Before you jump into house hunting, you should also ensure that you have your deposit saved as this will make your life easier going forward. In general, you should try to save at least 5% to 20% of the cost of the house you want.
For example, if you want to buy a house for £300,000, you need to save at least £15000 to have a 5% deposit. It is also good to keep in mind that if you are able to save more than 5%, you will have access to more mortgages options when it gets to that stage as you will be able to get a lower mortgage amount with better monthly repayments.
Get Your Mortgage Pre-Approved
If you are not lucky enough to have £300,000 in your savings pots, then you are going to need aa mortgage to aid you in purchasing your home. As stated above, most first-time buyers pay about 5% to 20% of the total value of their home in cash as a deposit and then borrow the rest from the bank to cover the remaining cost, which they will pay back in monthly installments over a period of years.
There are certain conditions lenders take into account when evaluating your mortgage application and the applications process itself can be complicated, confusing and overwhelming for most people. Luckily, there are people there to help you, as well as wealth online resources to make the mortgage process easier.
Plan for Other Costs
Aside from your monthly mortgage payments, there are additional costs when buying a home.
These include, but are not limited to:
- Surveyor costs
- Lawyers’ fees
- Removal expenses
- Building insurance
- Initial equipment and decoration costs
- Mortgage agreement and valuation fees
- Stamp duty
- The good news is, if your property is £500,000 and above, as a first-time buyer you will not have to pay stamp duty on the first £300,000.
Make an Offer
Once you find the house you can afford, and you are already approved for a mortgage, you can go ahead and make an offer. If this is your first time buying a home and you don’t know how to make an offer, you can allow your real estate agent do so on your behalf.
Ask your agent to help you ensure that your offer is competitive, but also fits your budget and home value. Be careful not to make an impulsive offer that is higher than you can afford to take out of the competition as this will no doubt end in debt further down the line.
There are several options buyers can consider for their first home, from new builds to shared ownerships and many ways to secure that home. But at the end of the day, what matters is that you get the house of your dreams, at a price that suits you, without putting yourself in trouble financially.