Are you ready to buy your first home?
Presumably you have thought about it for a while, talked it over with your partner, family or friends, and are doing some internet research before taking the plunge.
There are a few things to think about before you decide you’re definitely going to jump in and start the home buying process. Firstly, just to dampen your spirits a little, consider this question very carefully: is buying your best option? Could you be better off renting for a longer period of time before committing to owning property? Realtors at Classic Team Realty can help you in processing answers to the following considerations:
Advantages:
- Avoiding paying ‘dead’ rent money
- Increasing the value of your property over time and eventually making a profit in the resale
- No longer having to deal with landlords
- Having the option of keeping your mortgage repayments at a fixed rate year after year (while rent will often increase annually)
Disadvantages:
- Paying for unexpected repairs and maintenance, as opposed to your landlord dealing with them
- Affordability: if you can’t keep up your mortgage repayments your home will be repossessed
- If the answer to the big home buying question is still a resounding yes, then read on
Saving for a deposit
There are some fairly obvious benefits to having a sizeable deposit when you start the home buying process. The obvious one is that it will make it that much easier for you to get a mortgage. Another advantage is that you will immediately have equity in your property. The bigger your deposit, the more protected you are in the event of your property dropping in value. The property would have to experience a drop in value the size of your entire deposit before you were in negative equity.
The first obvious step to saving a deposit for your home is to write yourself a budget. The second obvious step, and the one that will no doubt prove the more difficult, is sticking to that budget.
Evaluate all of your expenditure. Determine what is necessary (rent, council tax) and what you could possibly cut back on or eliminate altogether. Ask yourself:
- Do I really need cable television?
- Could I eat and drink at home more often instead of going out?
- Do I make a lot of unnecessary and expensive phone calls?
- Do I have too many credit cards? Should I consolidate my debt?
- Do I actually use that expensive gym membership?
- Do I really need that new book, magazine, car, plasma TV, outfit or do I just want it?
Getting a mortgage
Many first time buyers invest far more time in finding the right house than in finding the right mortgage. To be fair, house hunting is quite a bit more interesting than mortgage hunting, but the two are equally important. After all, you will be living with both of them for many years to come.
The key is to research until you can research no longer, and then research some more. Consider carefully how much you can realistically afford to borrow. Most lenders will offer you up to three times your salary – some will lend more, but often at a higher rate.
It’s worth first time buyers noting that 100 per cent mortgages are virtually a thing of the past. You might be lucky if you have an impeccable credit history and you do some hunting around, but don’t count on it. Besides, starting off with no equity in your home leaves you in a very vulnerable financial position, so you’re better off taking the time to save for a deposit if you can. It may take patience and effort, but in the long run it will put you in a far more secure position.
Searching for and selecting your home
Location
How critical is your home’s location relative to local schools, the hospital, commuting distance to your work, accessibility to public transport and closeness to family and friends? Think about what’s going to be most important to you in an area: a low crime rate? Proximity to pubs, restaurants and entertainment? Make a list of your priorities.
Property specifications
Detached or semi-detached? Freehold (you own the house and land) or leasehold (you have exclusive possession for a specific period, but not ownership)? How many bedrooms do you need? How many bathrooms? How big do the rooms need to be? Do you need off-street parking? Are the windows double glazed?
Before you even begin to search for your home, sit down with a pen and paper and get your criteria in order. If it’s absolutely essential that you have a decent sized private garden, don’t waste your time looking at third floor flats. You’ll save a lot of time by having a fairly clear idea of what you want before you start searching for it.
On the other hand, it pays to keep an open mind and be flexible about some things. Remember – your first home does not have to be your dream home. Try to strike a balance between knowing what you want and being open to compromise. Expect your priorities and criteria to clarify as you view more properties.