Buying your first house can be super exciting, but also a little scary. Its one of the biggest decisions and financial commitment you’re ever likely to make. But owning your own home is still the ultimate dream for most adult. Renting often feels like a waste of your hard earned money as you’re simply spending your money to help your landlord pay off his mortgage on the property. It is far nicer to know your money is paying off your own home…plus you get all the fun of being able to decorate it to your own style!
So if you’ve saved a deposit and you’ve started looking for that perfect first home there are a few things that you need to think about before signing on the dotted line and picking up the keys – Here are a few first time buyer tips that you should consider
Are you ready for the long term commitment?
Don’t rush into taking out a mortgage unless you are 100% sure you are ready. The average mortgage term is 15-30 years, so it is a long term commitment. Even if you don’t plan to stay in the house that long, the commitment is still substantial. You need to make sure you are really ready to make this commitment, this is especially true if you are going into this with a partner. Your finances will now be tied together should you separate in the future.
Know your financial limits
Its all good being able to take out a large mortgage to cover your dream home, but you need to work out whether such a loan is actually affordable in your day to day life, or whether it would be stretching your finances a bit too much. The last thing you want to do when you have a mortgage to pay is end up slipping on payments and getting into debt as you’re living above your means due to high monthly outgoings. Work out your normal monthly budget and see what your upper limit would be for a mortgage payment.
So once you have your figures to hand, you should run them through a mortgage calculator to give yourself a good idea of your monthly repayment, and your interest repayments. Compare this to your upper limit in your budget and if its too much lower the Prince amount in the calculator until it matches your upper limit figure…this is the maximum mortgage you should take to enable yourself comfortable repayments.
Don’t forget all the extra payments
When you purchase a house you need to remember its not just the mortgage payment and the deposit you will be making upfront. There are lots of other costs that can quickly add up, so you need to make sure you have this money set aside too. The most commonly known is Stamp duty, which is often changing, so check to see how much you will need to pay depending on the value of your home. But you will also need to pay solicitor fees and other legal fees, moving costs and in many cases connection costs for things like your tv and internet packages. These hidden costs can add up, and may throw you into debt if you aren’t prepared for them. Thats before you even start thinking about the cost of redecorating or renovating your home.
