Buying property for the first time can be tricky. As consumers, we tend to fixate on the price. However, owning a home is much more than its sale price. There are so many extra costs to consider, which are commonly overlooked.
Here are four questions you may want to ask yourself before buying property.
Can you really afford to buy a house?
Let me explain the process. In modern markets, people take out mortgages with the banks in order to pay for a house. But before the banks grant or deny a person’s mortgage application, they first assess or determine a person’s ability to pay back the amount they owe by computing if the debt you’re taking out is 3-4 times more than your annual income. If it’s more than that, there’s a bleak chance for you to every get a new mortgage with the bank.
How much is total cost of buying a house?
I was a first-time home buyer over 30 years ago. My wife and I were a young couple, and we just wanted to move out of the shoe box of an apartment we rented in the city. Back then, we just followed what everybody else was doing- which is to save every pence possible in order to afford the deposit.
Although we saved up the right amount of cash for the deposit (after many, many months of saving), we were still unable to buy the house of our dreams! Why? It’s because we weren’t able to prepare for the additional costs of buying the house. No one ever told us that saving up the right amount of deposit wasn’t going to be enough when buying a property for the first time.
Rather than being able to step in the house immediately, we had to wait for a few more months before we were able to buy the house we wanted.
So what are these additional costs that you have to look for? Stamp duty is the most important among them, so never, ever forget to pay them. There are also buying and moving costs, insurance costs, valuation and survey fees, and other charges which may turn up whenever the need arises.
Where can you find the right mortgage deal?
First of all, there are 2 types of mortgage that every first time buyer must be aware of, those with tracker and variable rates and those with fixed rates. There are countless of providers that offer these 2 kinds of mortgages, but under different terms and conditions.
So how do you find the right one for your needs? I highly recommend doing some research online about the lender and what other buyers are saying about their services. You can also chat up a mortgage broker. Remember that you don’t always have to follow what the broker says to the letter. However, if they were able to find a good bargain for your capabilities and needs, they should be able to able to explain your options.
How are you going to repay the mortgage?
Mortgages are repaid typically in 2 ways: capital and interest and interest only. When you pay capital and interest monthly for the life of the mortgage, your debt will be cleared and you own the property outright at the end. Paying interest only will cost less on a monthly basis, but it is up to you to make sure you have the money at the end of the term to pay off the mortgage.
Tags: first time buyer, first time home buyer, mortgages, property for sale, property investment
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