Getting onto the property ladder can be increasingly difficult especially for first time buyers. They need all the help that they can get in financial and practical terms that's why we looked into answering what we anticipated the most common and crucial questions when considering buying a house for the first time.
1. Can you afford it? If you have a huge amount of savings and you think you can, then you're on the right track. But, you should know better than being complacent on your savings. Mortgages and we mean affordable ones are readily available for home buyers. Mortgage lenders, particularly banks are keen on allowing you borrow for as much as four times your earnings, given an impeccable credit score and your debts are in order. You can visit a bank or an independent lender's website and check their affordability calculator so you can find out if you can have a go as soon as possible or maybe hold it off for a while.
2. Who else can help you? If you can't afford the mortgage, then perhaps a family member or a friend can help you. They can apply as a guarantor or a co-borrower on the loan. Remember to just put a comprehensive agreement in place in case things get a little unfriendly in the future.
3. How much should the deposit be? Deposits will normally depend on the total selling price of the property and your negotiation skills. Roughly 10% to 30% of the contract price is required to be paid up front, as soon as you and the seller agree on the costs.
4. What else will you be paying for? Consider your monthly repayments for the mortgage on top of everything. The terms and the amount will vary depending on who you borrowed money from. Besides the mortgage, your obligation to the government should also be paid. A Stamp Duty Land Tax is normally charged at 1% of purchases over £125,000. Then you'll have to also allot money to pay for your solicitor/conveyancer who will take care of the legal aspects and the paperwork, a local surveyor inspecting the property and moving in incidentals.
5. What if you can't afford it on your own? If you really cannot afford it by yourself, co-owning the property will be one of your best options. There's also a rent-to-own scheme applied by several housing associations in the country, where you can buy a small portion of the property price and rent the balance until fully paid.
6. What kind of mortgage repayment scheme will you get? If you can afford it, you can take a repayment mortgage type, particularly if you have a high percentage loan. This type of mortgage lets you pay the principal loan amount and interest at once in chunks, every month. On the other hand, if you have a low-interest mortgage, paying the loan interest first before working to pay the principal amount may be ideal. However, the Financial Conduct Authority have very strict regulations on interest-only mortgages.