Looking to buy your first home? It is an exciting time that involves some of the most important financial decisions you’ll ever make. Let us help you! It is a big step but with us, the process doesn’t have to be difficult. We’ll take care of everything that is necessary when looking for a home and applying for a mortgage.
Below you will find the most important things you need to know about getting a mortgage on your first home.
Do I need a mortgage advisor or should I do it myself?
Deciding whether to get a mortgage advisor or manage your own investments is a big decision. Buying your first home and applying for a mortgage can be challenging. It takes a lot of time, skill, and effort. The mortgage advisor will help you make the right decision. Trusting your finances to someone with many years of experience and expertise will give you peace of mind and reduce stress caused by the whole process.
How much can I borrow?
Before starting a search for your ideal home, do a serious audit of your finances. It’s important to know how much deposit you have available and how much you can borrow to purchase your home. Generally, to qualify for a mortgage, you’ll need a good credit score and a history of paying your bills and other financial commitments on time. Contact us and we’ll help you calculate how much you can afford to borrow. The outcome of this audit will also tell us whether you’re ready to take this big step, or if you need more time to save a bigger deposit or fix your credit history.
How much deposit do I need?
Your deposit is the amount of money you’ve saved up to put towards your first home and it will help determine how much you need to borrow as a mortgage. Regardless of the price of the property, you’ll always need to put down a deposit of at least 5% (in most cases 10%). When looking for a mortgage, we can check which deals you might qualify for based on the size of the deposit you have. It is called ‘loan to value’ (LTV). For example, if you are looking to buy a property valued at £100,000 and have a £10,000 deposit you will be looking to borrow 90% of the property value. Typically, the bigger deposit, the lower interest rate, and cheaper monthly payment on your mortgage.
Additional costs you need to know about before buying a property
Although buying a house comes with a number of upfront costs, you will also need to be prepared for the ongoing costs while living in the property. Below we’ve listed the key costs for a typical 3-bedroom property.
Council tax – the exact amount may vary depending on the region where your property is located, usually within £120 – £200 per calendar month;
Gas – the price of gas will depend on your provider, but the average bill for UK households is around £40-£50 a month;
Water – the cost of a typical water bill on average is £35-£55 a month;
Electricity – the price of electricity will depend on your provider, the average monthly bill will be £45-£70;
TV license – The average cost for a TV license is £13;
Property insurance – The average cost of property insurance is £30 – £45 a month;
Fees for the purchase of a residential property
If you’re buying a property in England or Wales, there are two different types of ownership that generally apply: freehold or leasehold. If you buy the freehold, it means that you own the building and the land it stands on. When you buy a leasehold, you own the building but only lease the land from the landlord for a specific time. In that case, your lease will oblige you to pay ground rent and service charges to the landlord each year.
Typical fees associated with property purchase:
- Legal fees (multiple extra options: New Build, Gifted Deposit, Help To Buy, Leasehold/Freehold, etc)
- Stamp duty (depending on the price)
- Building Survey / Homebuyer Report (optional)
- Broker fees
If you have any questions regarding buying your first property or our services, please do not hesitate to contact us. Our mortgage advisers are happy to answer all your questions and explain the process of buying the first property. You can read more about our services here: Mortgage advisor Coventry.