Buying your
first House.
Buying a property is a major life decision, and it can be overwhelming, especially for first-time buyers.
There are so many things to think about, such as finding a suitable property, getting a mortgage, and moving in.
When you’re buying a house, there are a number of one-off costs that you need to factor into your budget. These include:
- Deposit: This is the amount of money you need to put down upfront as a show of good faith to the lender.
- Mortgage arrangement fee: This is a fee charged by the lender to process your mortgage application.
- Valuation fee: This is a fee charged by a surveyor to assess the value of the property.
- Legal fees: These are the fees charged by your solicitor to handle the legal aspects of the purchase.
- Stamp Duty or Land Transaction Tax: This is a tax that is payable on the purchase of property in the UK. The amount of tax you pay depends on the value of the property.
- Removal costs: These are the costs of moving your belongings to your new home.
In addition to these one-off costs, there are also a number of regular ongoing bills that you will need to pay as a homeowner. These include:
- Council tax: This is a tax that is paid to your local council to fund local services.
- Energy bills: These are the costs of heating and lighting your home.
- House insurance: This is insurance that protects your home from damage or theft.
- Repairs and decorating: These are the costs of maintaining your home in good condition.
- Furnishings: These are the costs of buying furniture and other household items.
It is important to factor all of these costs into your budget when you are buying a house. This will help you to avoid any financial surprises after you move in.
What exactly
is a mortgage?
A mortgage is a long-term loan that is secured against the value of your property. The term of the mortgage will determine how much you pay each month. If you don’t make your mortgage payments, the lender may repossess your property and sell it to repay the loan. Therefore, it’s important to make sure you can afford the mortgage payments before you borrow money.
The different options available
to repay your mortgage.
01. Interest only mortgage.
An interest-only mortgage is a type of mortgage where you only pay the interest on the amount you borrow. The capital (the amount you borrowed) is repaid at the end of the mortgage term, either in a lump sum or through a repayment vehicle such as a savings plan.
02. Repayment mortgage.
A repayment mortgage is a type of mortgage where you repay both the interest and the capital you borrowed over the term of the mortgage.
This means that your monthly payments will be higher than with an interest-only mortgage, but you will have the security of knowing that your mortgage will be repaid in full at the end of the term.
Both interest-only and repayment mortgages are secured against the property, meaning that the lender can take possession of the property if the borrower defaults on the loan. However, for first-time buyers, we generally recommend a repayment mortgage, as this will help you to build equity in your home.
What size
deposit do I need?
When you buy a property, you will need to put down a deposit, which is a sum of money that you pay upfront. The amount of the deposit will depend on the value of the property, but it is typically 5%. The remaining amount of the purchase price is borrowed from a lender, such as a bank or building society. This is called a mortgage.
The larger the deposit you can afford, the less you will need to borrow from a lender. This is because you will be seen as a lower risk to the lender. As a result, you may be offered a better mortgage deal with a lower interest rate.
For a house worth £150,000, that means saving £7,500 just for the minimum deposit.
If you’re able to save more and can afford a bigger deposit, you’ll probably get a better mortgage deal.
If you’re struggling to save enough for a deposit, the Government’s Shared Ownership scheme may be able to help.
Clients.
MAKE A DIFFERENCE.
Contact.
LET’S TALK.
To discuss how we can help you please contact us using the details below for an initial chat or to arrange an appointment with one of our Advisors in Cornwall.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED UPON IT.