Buying your first home and the process that accompanies it is said to be one of life’s most stressful experiences. Luckily, we’re here to challenge that belief and we believe with the right knowledge and understanding of the first time buyers market, you’ll be in a good position to start searching for your dream home.
Before buying any property, however tempting it is jump online and search for that cosy detached cottage in the countryside, the first and most important step to getting on the property ladder is sitting down and figuring out how much money you have, or how much you need to save – it’s as simple as that. It is also important to be aware of additional costs that come with buying a new home, such as monthly mortgage repayments and Stamp Duty. These financial factors tend to scare off a lot of people, with the Office for National Statistics revealing that only 36% of 25-34 year olds own a home. However, we believe that rumour mills play a huge part in this figure, but in actuality it’s a lot more simple to purchase your first home with the right advice – advice you can find here.
The first few steps
Putting a deposit down on a house is the first step of any property purchase. The minimum deposit for most lenders is 10%, but with the new ‘Help to Buy’ scheme from the government, selected homes will only require a 5% minimum deposit. This encourages first time buyers to take the leap and purchase their first property, with the scheme also offering a 25% boost of your current savings if you open a ‘Help to Buy’ ISA. Once a deposit is placed down on a house, you are free to move into your new home knowing the first and toughest hurdle is over.
Mortgage options explained
In terms of cost (besides the property itself) the main things you will need to pay out for is your mortgage, dependant on how much you pay upfront for the house. For instance, if you take out a 3% 25 year mortgage on a £150,000 property, your monthly repayments (if at fixed rate) would be £711, including interest. There is also an option to pay just interest back. This will decrease your monthly repayments significantly, but after the 25 years you would still owe the full amount back. In choosing this method, you would need to show some form of savings to prove to your mortgage lender that you will be able to repay the full amount in a lump sum at the end of the agreed term. You can additionally choose between a fixed and variable rate, depending on how much you are willing to risk. With a fixed rate (as mentioned above) you are guaranteed to pay no more than the agreed fee every month, but also no less. At a variable rate, it follows the growth/decline of interest rate, so you could pay less or more in the long-run, but there’s no way to tell. There’s also options to remortgage your property, but we won’t get into that now. Still with us?
Swerving Stamp Duty
Stamp Duty is something else you’ll have to look into paying and has to be paid in 30 days of purchasing your property. If your house is under £125,000, then good news, you won’t have to pay a penny. However, the more your house is valued at, the more you will have to pay
Seek professional advice
If all of these tasks seem way too complicated and are putting you off even thinking about buying your first property, then stress not, solicitors are paid to do that for you. If you think you are way in over your head and can’t cope with the complicated structure and payments of various components that come with buying a house, then you can hire a solicitor to offer their professional and legal advice – we believe this is the best option for first time buyers.
Hopefully all of this information, as complicated as it may seem will sink in and help you on your way to buying your first home, declaring you officially a homeowner. Good luck!
[Image sourced from Flickr]
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