Buying your first home is exciting, nerve-wracking and scary times in your life. You will be plunged in at the deep end, having to pay out for solicitor’s fees, mortgage deposits and all the extra costs. So, before you start to panic and wonder how you get started: here are the things you need to know.
Meet with an adviser before looking at homes
Although the classic way to go about this is to take a look at some estate agents, shop around for houses and then once you’ve found something you like, to apply for a mortgage. However, the better way to go about this is to contact a mortgage adviser first. If you are a first time buyer, you may already have your deposit saved up, but it is advisable to talk to someone before you start looking for your first home. It will give you an idea of the process and how much you can realistically afford.
Pay Off Any Debt
If you have any debts currently from credit cards or other avenues, pay them off as much as you can. A mortgage is the biggest loan you will ever take out, and your mortgage lender will want to make sure that you can afford to repay the loan each month comfortably. If you have loads of debt, or payments coming out of your bank each month, the lender may be reluctant to accept your mortgage application.
Work On Your Credit Habits
Once you are in your new home, you will be forking out every month for your mortgage payments, bills and broadband. These costs are large, and you need to get into the habit of putting money aside for them every month to save you going into your overdraft.
Refinance Student Loans
If you have a hefty student loan to pay off, you may want to come to an arrangement to stretch out the loan over a longer period of time to reduce monthly payments.
Work History
A huge thing that mortgage lenders will look at when you are purchasing a home is that you have stable income. Many lenders will want at least 2 years work history to prove that you are in a stable job and the situation isn’t likely to change anytime soon.
Record Everything
You’ll need to get handy with your filing skills, because you will need your tax returns, bank statements and other important documents when you are applying for the mortgage as evidence of your income and address.
Stay Away From Credit
Before you go out and buy loads of new furniture for your home using credit, keep in mind that you haven’t yet paid your first monthly fee. Wait until you’ve paid the money off and see where you are up to financially before splashing the cash.
Talk To Several Lenders
Different mortgage lenders will offer you different loans. Even if you have the same percentage to put towards a mortgage, or are looking into more high value mortgages, every lender will offer something different. Before you dive in with the first lender you speak to: don’t be afraid to shop around for a better deal.
Shop For Closing Agents
The fees you will pay for closing can vary widely. With document preparation, legal fees and insurance; you could find that your final payment can vary dramatically depending on who you go with. Ask your estate agent and mortgage lender for advice on where to look and who will offer the best price for the services. You can also ask family or friends and see what they recommend.
Think About the Extra Costs
Apart from your deposit and money for interest, there are a lot of other fees you need to be prepared for. Solicitors will charge for the service of exchanging your contract, you’ll need to fork out for stamp duty on the land you purchase, and you’ll want to get a survey done on the property before you move in to check that it is suitable for purchase.
Self-Employed
If you are self-employed, you may find it a little more difficult to apply for a mortgage because you will have to prove that the source of income you have is stable and will not change. It can take two years of being self-employed or running a business to be able to be accepted for a mortgage, so be wary of this if the issue ever arises. It may mean that you have to wait a little longer before buying a house.
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