The process is quite lengthy and it is impossible to know all the complications first time around. The aim of this guide is to make process, take you through some of the main stages & most common mistakes that may come up your way so you can avoid them.
Here are 5 common mistakes that first time home buyers must avoid:
1. Unplanned Deposit
A deposit of minimum 5% of the property price must be paid. It’s worth saving more than this if possible as higher deposits open up better deals & offers attractive interest rates.
Here using all of the savings for deposit can be the biggest mistake. However, this makes sense on the face of it as you wouldn’t have to pay much later. Still it’s worth holding back some savings for emergency situations like for leaky roofs, blocked drains, broken boilers etc.
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2. Not taking all the cost into consideration
You might have calculated about the monthly repayments of the mortgage, but there is a lot more than this. Have you given a though to the other monthly expenses like Insurance of the property, Life assurance, Utilities, council tax and property repairs and maintenance. Often first home buyers overlook these costs and these are just some of them. Spend some time to identify the potential expenses, to ensure you can cover all the costs comfortably before committing.
3. Misunderstanding your affordability to borrow
Do not overstretch! You might be able to afford a costlier house with larger repayments, but think how it will impact your quality of living. It might be difficult to identify how much you can afford to borrow. The lenders of the mortgage evaluate affordability considering several factors such as your salary & other source of income, deposit size, existing loans, debs, credit cards, bills, childcare, travel, general costs and credit score.
4. Not performing a Decision in Principle (DIP) before you search
It is fun searching for a new house, though it doesn’t help you in the long run. Buying a house is a big investment and it is better to make a sound financial-decision equipped with all facts. Start with getting an AIP (Agreement in Principle) or DIP from a lender before you start viewing any properties. This illustrates that you can afford to purchase a property and puts you in a strong position.
5. Not looking for advice
You are new to the house buying game and property market and working alone is not advisable. It is important to get in touch with the best mortgage advisor London who you can trust and can guide you through the process as mortgage deals are minefields with numerous fees, rates and term-lengths to get your head spin.
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