Are you getting ready to buy your first home? If so, perhaps this budget guide for first time homebuyers can help you with some of the questions you might have. Since buying a property can be expensive and there are lots of costs involved, this first time homebuyers guide can show you what to look for and what to expect; at least from a cost perspective especially if you haven’t been through the process before.
Getting started on drawing up a realistic budget:
One of the most obvious and most challenging costs involved in buying a home is saving a big enough deposit to qualify for a mortgage. Although it is possible to get a mortgage with a deposit of just 5%, the interest rates charged will be much higher than if you are able to put more money down.
The best mortgage deals are reserved for homebuyers who can put down a deposit of 25% or more. If you have a less than perfect credit history, you may find that having a larger deposit helps to counter the concerns that lenders may have.
Many people decide to get a mortgage offer in principle before they start house-hunting; this might also be something that your real estate agent will advise you to do. This provides the reassurance of knowing how much can be borrowed plus the level of deposit which will be required. There’s nothing worse than finding the home of your dreams only to discover that the mortgage you qualify for won’t stretch to cover it.
Once you have your offer in principle, you will know how much the mortgage will cost every month, allowing you to make sure you don’t overstep what you can afford.
Make sure you also find out whether there are any one-off fees which apply. Some lenders charge reservation or booking fees and there may also be costs which are payable on completion.
In order to grant you a mortgage, your lender may well need a survey to be carried out in order to determine the value of the property and also to check that there are no major faults.
However, this survey is not much more than a cursory glance-over and may not be sufficient to provide enough information for the potential buyer. A more in-depth survey can therefore be commissioned which assesses the property in a much greater level of detail, checking for problems which would be of interest to the buyer, not just the lender.
The amount the survey costs can vary widely, depending on the type you decide you need. Older houses will require more detailed surveys whilst new builds may only need a quick once-over. Therefore budget for at least a few hundred dollars.
This refers to all the costs involved in both the buying and selling of property and includes what your lawyer will charge.
The amount you have to pay may vary depending on the work involved and the level of research that your lawyer has to carry out. Make sure you get an estimate before deciding which lawyer to appoint. Your lender or real estate agent may be able to recommend a good lawyer if you don’t have one in mind.
The fees will typically include the following:
- Local authority searches
- Land registry fees
- Environmental search
- Water and drainage search
The above guide helps to run through the costs you will incur as a first time buyer and to help you budget for what you will need to pay. However, as well as the costs of purchasing your property, make sure you have carried out a realistic and accurate assessment of how much it will cost to run your new home every month, taking into account utility bills, food, mortgage and other essential expenditure.
Buying a new home is one of the most exiting events you can experience; just make sure you have the finances to cope with both the initial purchase and the on-going costs.
Article and insights provided by Watford Estate Agent, Marshall Vizard who is available to assist first time buyers, see their website and call their team today.