Buying property remains an essential part of financial independence for many. Although it is by no means mandatory to own, it is the most accepted way to financial independence in our society. Money aside, owning your home may also come with psychological benefits such as having stability and being able to build a nest. However, getting on the property ladder can be scary. To make the process a little simpler, here are some of the main considerations that you should take into account.
This is a collaborative post.
Considerations for first-time buyers
Work Out Where You Want to Live
This might seem like an obvious consideration, but it’s nonetheless important. Have a think about where you want to live; do you want to live in the same town that you’ve lived since you were born? Or do you want to move out and enjoy the offerings of another area/country? This choice will also depend on where you are working/want to work and how far you want to be from your family. Often, people will tend to move a little further out, whilst still ensuring that they are close enough to their family that they can visit them on weekends.
Where you want to live will also depend on how much you want to spend. Unfortunately, houses and apartments are a lot more expensive now than what they once were. So you might find that you can’t afford a property around the same area that you grew up in – especially if you currently live in/around the capital.
That’s just one of the downsides of this market – how hard it is for first-time buyers to find a home that suits them that they can afford.
Work Out Your Budget
Following on from that, you need to sit down and think about how much you can realistically spend. Houses are pricey – no matter where you are looking. So you need to make sure that you have the funds readily available. The first step of which is acquiring a deposit.
If you’re planning on buying rather than renting, you need to build a deposit. No matter how you build up your deposit, whether it’s from working or from the bank of mum and dad, it’s a key factor in purchasing a house. If you don’t have the savings or your parents don’t have the money readily available, a way that you could acquire the deposit money is through a guarantor loan.
Now some banks might not accept money from a loan as part of your deposit, so you will want to check this before applying for one. But if they do, they can prove to be invaluable in the long term as it means that you will have the funds almost immediately after being accepted.
First-time buyers might also have a poor credit rating as they probably only just have acquired a credit card. If that’s the case, a website such as Buddy Loans offers guarantor loans that don’t require a good credit rating.
If you’re thinking of using a guarantor loan, you must also remember how they work. A guarantor loan will require a friend or family member to keep up with repayments if you can’t – and with a newly acquired mortgage, you might find yourself in this situation.
What Mortgages are Available
Mortgages. A terrifying word that makes you realise that you have to be an adult. This is when you know that you’ve left the years of relying on your mum and dad. Now you have to go out on your own and understand the way that the world works. No one is programmed to understand what a mortgage is – it’s something that you learn over time and probably after extensive research on the internet.
But when you have found your dream first home, the reality of mortgages is something that you have to face. There are so many mortgages out there, so it’s a good idea to compare and contrast before settling on one. The main aspects that you should pay attention to are:
- Whether they have a fixed or variable rate: To put it simply, this will mean if you pay a fixed amount each month on your mortgage or the amount changes.
- How much you pay each month: This will vary by the deposit you put down, your income and what bank the mortgage comes from.
- Repayment terms: Usually, the longer the time you have to pay back the mortgage, the better the monthly payments. An average mortgage will last between 25-35 years.
- Other fees associated with the mortgage: Unfortunately, it’s not just the deposit that you will have to pay for upfront. You will also have to pay fees associated with the process. Examples of which being the arrangement fees, valuation fees and advisor fees.
If The House Needs To Be Renovated
If you’ve fallen in love with an older property, you will also need to factor in if it needs any renovations. The amount of work that you do will, of course, depend on how much you are comfortable doing. Often, people will choose a new build or a more modern property for their first home as it means that they can move in without having to do any work.
But if you want an older house, you need to consider 1) how much the work will cost 2) how long it will take. If the renovations need to be done straight away, you can use it as a bargaining chip to get the price down. But if it can be done over time, you can purchase the home and do it up when you have moved in.
A couple of other costs associated with moving are:
Home insurance is key when you buy your first home. Protecting in case any damage occurs, it’s a monthly outlay that more than pays for itself. There are many companies that offer home insurance, so make sure you compare prices and the features that come with each before making a final decision
When you are buying your first home, it’s exciting to pick out new furniture. But this new furniture won’t come for free. So it’s a good idea to budget out what essential pieces you need and what can wait until you have a little extra cash. You can then look online and in the shops and find pieces that will fit.
When it’s moving day, you will more than likely need a van to move all of your stuff in. Even though these tend to be quite cheap, they will need to be arranged in advance of the move.