September 27 2016 Latest news:
Adam Aiken, Editor
Friday, May 18, 2012
Buying your first home is likely to be one of the biggest steps you will ever take.
Perhaps it is not quite as life-changing as getting married or becoming a parent, but it’s still up there as a major event.
As such, it can be quite daunting. For many people, owning a home is something that only “older people” do, and the realisation that it is time for the next generation to step on to the property ladder can be a real “coming-of-age” moment.
So it is important to take your time when you go through the process. It may be an exciting period of your life, but make sure you do not rush it.
How much can you borrow?
Before you start house-hunting, find out how much you can afford to borrow.
“It is important to think about your current monthly outgoings – knowing you can meet your payments every month makes having a mortgage far less stressful,” said Chris Smith, of Yorkshire Building Society.
Jayne Walters, a spokesman for the Council of Mortgage Lenders, said: “If you are looking to buy your first home, you need to have saved a good-sized deposit to get a mortgage.
“Although products with small deposits are available, as are schemes to help first-time buyers and other borrowers buy properties, the best rates will be found with larger deposits.
“All lenders have different criteria, so shopping around or using a broker can help you work out the most suitable mortgage.”
A mortgage lender will look at your budget to gauge what you can afford to borrow. In order to ensure you don’t find yourself committed to repayments you cannot meet, you may be taken through an affordability check that will look at your salary and monthly outgoings.
It is important to tell the truth at this stage. An affordability test is to help you as much as the lender, because if you end up unable to afford your mortgage repayments, you will risk seeing your home repossessed.
Sometimes a lender will give an “agreement in principle” – an indication of what you could borrow. This will help guide you towards properties in the appropriate price bracket and reduce the risk of being disappointed further down the line.
Check out the neighbourhood
As well as the financial side of things, do some research into where you would like to live.
“If you’re moving to an area you don’t already know very well, take the time to visit and research the surroundings thoroughly,” said Mr Smith, at the Yorkshire.
“Look around a lot of properties for sale to get a feel for what’s out there and what prices are like.”
When you have found an area or a property that you like, make a few return visits at different times of the day and week. You may discover that the nice quiet pub at the end of the road becomes a rowdy night spot on Saturday nights, for example.
Research by HSBC has found that many first-time buyers are ignoring some of the practicalities of owning homes.
Although things such as a property’s location and local amenities were often taken into account, the bank found that issues including plans for further development in the area, the condition of nearby properties and signs of subsidence were often overlooked.
These are all things that can affect the future value of your new home, and Peter Dockar, head of mortgages at HSBC, warned against naivety.
“It is important that first-time buyers consider more than just their immediate desires when looking for their first homes, otherwise they could well be in for a financial headache further down the line,” he said.