Buying your first house will always be the most important thing in your life. Not just because of the emotional aspects associated with it, but also because of the practicality it has to provide.
You’re not just looking for a place that fits your budget. Shopping around for a new house entails a close inspection of your location, amenities, and even your neighbours. Many people face huge financial setbacks when paying the mortgage as a result of their impulsive decision.
If you’re scanning the market for your first house but don’t know where to start, take a look at these 7 tips to ease the process.
Review Your Requirements
The first part of the house purchasing process is deciding the neighbourhood and fix a budget. Think about the size of the house and the number of rooms you need. You also need to check on several other considerations, like safety, proximity to hospitals and work, and other features like a garden or swimming pool.
Before buying your first home, you need to consider how much money you can invest in your new asset. Checking on the local tax rates and working out the amount of mortgage can give you a fair idea of the expenditure.
Be Prepared With Adequate Funds
Buying your first home may require more money than just the ownership costs. According to an independent survey, the average cost of buying a 3-bedroom house in the UK may cost approximately £234,370. That includes various other costs such as 10% deposit fee, mortgage fee, disbursement fee, stamp duty and others.
Apart from the onetime upfront cost, there are myriad hidden expenses like house insurance, maintenance, property tax, home décor, installations and others. As such, you need to be prepared with 10-20% extra money for the whole setup.
You need to keep money aside for the next six months and check if you are debt-free at the time of buying your first home. Try to avoid paying for your house mortgage at the same time as other instalments, like auto-loan, credit card payment, or any other outstanding loans.
Estimate Your Affordability
You have to be sure that you can afford the house you’re buying. It might seem like common sense advice, but ignoring the numbers and making impulse purchases has some devastating financial consequences. Every year, countless people in the UK drown in mortgage debt and end up losing their house in the process.
On average, the monthly expenditure on your new house should not be more than 25% of your monthly take-home pay. Another thumb rule states that you should not pay for a new house which is 3 times more than your yearly income. This way, you can take better control of your money and avoid paying expensive mortgage fees.
Save For The Down Payment
It is quite common to impulsively pay the down payment from a monthly salary or by taking out a 500 pound loan. The deposit amount may vary from 5-20% of the total cost of the house based on certain factors. Paying that money upfront can cause a great deal of financial distress.
A smarter thing to do instead would be to save up for your first deposit over time. Set that amount of cash aside early on to clear your housing down payment without breaking the bank. It might be useful to pay the higher deposit amount for low mortgage rates in the long run.
Settle For A Pre-Approved Loan
One of the decisions you’ll face when purchasing your first house is applying for a loan. Always try to settle for a pre-approved loan to make the process less taxing.
While applying for a loan, it is important to compare the mortgage rates from at least three lenders, if not more. Your credit score, loan history and source of income will also play an important part in determining the final amount you will get.
For those who don’t have a good credit score or need quick cash, a no credit check loan is a more suitable option. You can avail a higher credit amount with flexible tenure periods and less documentation.
Hire A Professional Agent
Buying your first home is very important to you, considering the emotional and practical aspects associated with it. It is admittedly one of the biggest investments of your life. Therefore, you might want to hire an expert real estate agent to guide you through the process and ease the burden.
A professional agent will look after each aspect from finding the property and doing the background check to settling the last deal on your behalf. Plus, your real estate agent can help you get an approved loan according to your choice.
Hiring an agent seems like an avoidable expense, but as a first-time house buyer, you might not be aware of all the ins and outs of the real estate industry. By letting a professional take the reins, you can focus on other aspects without having to worry about house verification, negotiations, and contractual formalities.
Stay Open For Multiple Options
Now that you are allowing a professional agent to look for your first house, it is recommended to keep multiple options. Let the real estate agent know about your every preference, need and demand on your first house.
Do not close the deal after visiting one or two houses, since you may find a bigger or more suitable house on offer at a much lower cost than the first option. You should visit at least five different houses of your choice, evaluate your options and then close the deal.
On the face of it, purchasing your first home doesn’t seem like much effort. But finding the perfect house needs a lot of time, planning, and foresight, without which you could find yourself in a state of absolute financial frenzy.
Plan your finances properly and always try to select a location which is closer to your work. If you need a quick line of credit while buying your first home, no credit check loans might serve the purpose.
Krishna Murthy is the senior publisher at Finance XOD. He is not only the senior publisher but also the owner of Tricky Finance. Krishna Murthy was one of the brilliant students during his college days. He completed his education in MBA (Master of Business Administration), and he is currently managing the all workload for sharing the best banking information over the internet. The main purpose of starting Tricky Finance is to provide all the precious information related to businesses and the banks to his readers.