The Ultimate Guide to Buying Your First Home

Lessons Learned from Selling My First House

When buying your first home, there is a lot to know and consider. This ultimate guide will talk you through each step and help you prepare your finances, save for your deposit, apply for a mortgage to get the keys. 

Get Your Finances in Check

The majority of people will need a mortgage to go ahead and buy their first property. To get a mortgage, you need to demonstrate that the mortgage will be affordable and that you are capable of meeting the monthly payments. 

These criteria are mainly assessed on your credit score, your debt to income, and an affordability model the bank uses. 

Importance of a Good Credit Score

A mortgage tends to be one of the most considerable debts a person takes on. So before any lenders agree to finance the mortgage, they want to have confidence that you will be able to repay it. 

To do this, they assess your credit score. This report allows them to understand how you have handled money in the past. 

It is assessed by a number. Building up and bettering your credit score takes time. Ensuring that payments are made on time, debts are repaid, and not having the level of unsecured debt all influence this score. 

To boost your scoring, use direct debits to meet each payment on time, clear credit card balances in full each month, and keep the levels of outstanding debts as low as possible. 

Debt to Income and Affordability

The mortgage lender will factor in all of your current debts and how much of your income is required to repay them. The more income you are using elsewhere, the less surplus income you have available to support the mortgage repayments. 

The amount of surplus income once your other commitments are paid heavily influences the amount of mortgage you are eligible for. 

To get a larger mortgage amount, you will want to keep your debts as low as possible and demonstrate that you have the disposable monthly income to support your mortgage repayments. 

Understand How Much You Can Borrow

Different mortgage providers will have different algorithms that determine how much they are willing to lend a person when buying your first home. 

It is worth carrying out a variety of different affordability assessments to understand how much you can afford to borrow, as this will allow you to know what value of properties you can realistically look at. It will also influence how much deposit you will need to save. 

Save Your Deposit

The majority of mortgage companies will lend you a percentage based on the overall price of the property you are buying. This can potentially be up to 95% of the property’s value, but the percentage limit is based on a variety of factors. 

Once you know roughly how much you will be able to borrow on the mortgage, you can work out what deposit you will need to put down in order to buy the type of property you want. 

Cutting back on everyday expenses and freeing up as much disposable income as possible will then help you save quickly. In addition to saving for your deposit, you will also need additional funds set aside for legal costs, moving costs, and any mortgage fees.   

Go House Hunting

Once you have your finances in order and a deposit in place that is when you can start actively looking for your new future home. This is an exciting time when buying your first home.

Knowing exactly what you require from the property and following guides such as how to find the best neighborhoods will make the process easier. When looking for a property, it is important that you are realistic that the process can take time. 

Your dream home may not be available immediately, but keep looking. Alternatively, consider whether you are willing to renovate in order to transform a property into your ideal one. 

Make an Offer

Once you have found a house that you love, you need to consider how much you will offer when buying your first home. 

Properties have a guide price, but if more than one person is interested in the property, you can end up in a bidding war. Completing research around what other properties are valued will help you make your offers based on factual information and not be driven by your heart. 

Your mortgage company will only mortgage the based on a market value, if you pay more than this, the difference will need to be self-funded. 

On the other hand, if the property has been on the market a while, you may be able to offer under the guide price. It is always worth understanding how long the property has been listed before making an offer to buy. 

Apply for Your Mortgage

You have found the property got your deposit and finances in check, so now you need to finalize the mortgage when buying your first home.

Whether you opt to arrange this yourself or use a real estate broker, you will want to select a mortgage lender that is offering favorable interest rates. 

Once selected, provide your income details, details of the property and allow them to check your credit and wait for the formal mortgage offer. 

To buy a property there are legal checks are required. The property needs to be transferred into your name, the boundaries need confirming, and depending on where you are buying there may be other legal checks required. 

Your realtor will be able to guide you and recommend someone to complete the process of buying your first home for you. 

Sign Your Contracts and Exchange

When all of the legal checks are complete and an exchange date is provided, your mortgage lender will transfer the mortgage over, you will send your deposit and the sale is complete. It is at that time that the keys get handed over and you officially become a homeowner when buying your first home. 

Once you have the keys, before moving your belongings in make sure the terms of the contract have been met by completing a walk-through. If there are any issues your realtor will be able to assist. 

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