Buyer beware… mortgages and propertyPosted on: 14 August 2012 by Gareth Hargreaves
Ronan Marrion urges caution when budgeting and drawing up a house-buying checklist.
Buying anything these days seems to be fraught with potential problems. Even choosing groceries involves checking ingredients, use-by dates, even calories for those of us who are watching our weight.
When it comes to buying bigger and more expensive things, then even more checks have to be performed. And if you neglect the checks, then you've got a bigger problem than just having to thrown away an out of date bag of apples. Not only that; a bag of apples costs around £2, so in the worst case scenario and they go rotten before you've had the chance to eat them, you've only lost £2. Get things wrong when you're buying a house, however, and you could lose a considerably larger amount of money and a lot more than a bag of apples.
Which is where a first-time buyer check list comes into play. If you're considering buying your first home, give yourself an advantage by being as prepared as possible from the outset.
A house is likely to be one of the biggest purchases you make in your lifetime, and not only in financial terms. For most people, a house is a home; you invest more than just money into it. It might be somewhere you live for years, somewhere you raise a family. Whatever your reasons for buying a house, getting it right is hugely important.
So where to start? Ideally, you want to start with a budget. Know how much you have got available to spend; do this by finding out how much you can afford. There has been a shift in thinking about mortgages in recent years from 'how much you can borrow' to 'how much you can afford to repay'. It's a crucial difference. Lenders, such as banks and building societies will consider your income, but the traditional mortgage measure of being able to borrow 3x your salary has been superseded by your ability to repay. This means that you are likely to be able to borrow more if you have fewer outgoings and fewer dependants than someone who might have a higher salary, but has children and several financial commitments.
But don't start worrying about how you can figure all this out, get in touch with an independent mortgage broker. It's part of a broker's job to help you work out how much you can afford to borrow. They'll look at your entire financial situation, including all your income and outgoings as well as discuss with you how you'd like to repay your mortgage and for how long you'd like to have your mortgage.
So that's your budget and your mortgage checked off. All good independent brokers will also help you make sure everything else on your house-buying checklist is checked. There are some interesting new mortgage products coming onto the market at present, (which we'll be looking at in more detail in our next article) but the terms and conditions need some checking out.
Taking on a mortgage involves not just borrowing money and having to pay it back, there are legal considerations, too. To make sure you've got all your legal checks done, you'll need a solicitor and if you're self-employed, your accountant will need to be involved as well.
Getting all these professionals together isn't easy on your own, which is why, particularly if you're buying a house for the first time, an independent broker can be tremendously helpful. All good brokers will liaise with the different people involved in the house buying process, including the lender, valuer, surveyor, solicitor and anyone else, to make sure they all work smoothly together and do the best for you, the buyer.
And their job doesn't stop even when you have the key to your new home. Neither is it quite time to throw away your checklist. You want to make sure your home is protected should anything happen and any good broker will help you find the right kind of cover such as buildings insurance and life insurance.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured on it.
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