Buying your first house is a huge decision and a long-term commitment. These tips will help to take some of the stress out of the process, and make it a decision that brings you joy.
Decide on Your Budget
Before you go house hunting, figure out what kind of house you can afford. If you’re not sure where to start there, then consider the rule of thumb that you can get a mortgage for about 4x your income. Think about your income, how stable it is likely to be, and how old you want to be when the mortgage is paid off, and work from there.
Double Check Size, Location, Price
House prices can vary massively from area to area. A small home in London will cost more than a family home in the North East. A home in the city center could cost more than one in the suburbs. The housing market can be quite unpredictable since there are so many things that can influence house prices. If you’re starting a family, do bear in mind that school ratings can affect house prices. If you can afford it, though, it’s worth the extra funds for a good school.
Work Out The Mortgage
The cost of your mortgage will depend on the amount you are borrowing, how long you are paying it off for, the size of your deposit (and whether you are using any Help to Buy type government schemes), and your credit rating. You should calculate your costs first. It’s a good idea to save up a sizeable deposit before shopping around, so now is a good time to try to curb your spending addiction! Bigger deposits will mean lower Loan To Value (LTV) mortgages, and potentially better rates.
Research Home Loan Options
There are several different kinds of mortgage, including repayment, interest only, cashback, fixed rate and variable rate mortgages.
There are benefits and downsides to each of these, and it is a good idea to seek professional financial advice before you decide on what you are taking out. A fixed rate mortgage gives you peace of mind that you know what you will be paying. Variable rate mortgages could leave you better or worse off, depending on the financial climate when your rate changes. Interest only mortgages will need to be paid off when the mortgage ends, and you will need a separate repayment vehicle for that.
Get A Home Warranty
If you are buying a new home then a home warranty is a good idea. These warranties cover you for defects in the home, and will typically last for 10 years. There are several companies that offer home warranties, including the NHBC, and Premier Guarantee. There are some other organisations that offer guarantees, such as Checkmate, depending on who built your property. These warranties are limited, but they are a valuable option to protect you from poorly-built homes.