Whether you are a first time or experienced buyer or buying as an investment, the key thing throughout the process is being organised.
Work out your Budget
You need to work out not only how much you can borrow but how much you afford to pay each month. Initially you will need money for the deposit, legal fees, mortgage fees, valuation fees and stamp duty if applicable. Once you own your home there will be additional costs you may not have at the minute such as gas, electric, internet, home insurance and general costs in maintaining your home. You should also remember that your mortgage payments may increase in future.
Arrange a Mortgage
A mortgage is going to one of the biggest financial commitments of your life. As such it’s important that you find the right deal for your circumstances. Since the credit crunch it has become more important that you find a lender who is prepared to give you the mortgage, before you make a commitment to buy. You should arrange this well in advance as the process can now take longer than it once did. There are many different types of mortgages the most common of which are:
- Fixed Rate. With this type of mortgage you agree an interest rate that will remain fixed for an agreed duration such as 2 or 5 years. It allows you to budget as you will know exactly what your payments will be throughout the fixed rate period. At the end of the period the rate will normally revert to the lenders standard rate which may mean your payments go up or down.
- Variable rate. The rate of interest and hence your monthly payments will go up and down in line with the interest rate set by your lender.
- Tracker. These are similar to variable rate mortgages but they tend to go up or down in line with changes in the interest rate set by the bank of England. The rate is usually set at a premium to the rate set by the bank of England, for example Base rate + 3%.
Your mortgage may come with a booking or application fee which can be several hundred pounds. In addition the lender may require that you pay for a valuation. It is always advisable to take advice on which mortgage is right for your circumstances. Some lenders may have exclusive mortgages only available through mortgage advisors.