First Time Buyers
Buying a house is often the biggest investment one makes in one's life and one of the biggest commitments one takes. Therefore it is extremely important to take extra care when making a decision to buy, especially when buying for the first time. There are few things that require special attention:
- How much can you borrow? Most banks use income multiples to arrive at the maximum amount they are happy to lend. Although these can vary from bank to bank as a guideline is recommended to use 4.5x single or 4x joint income. This means that a joint annual income of £35,000 would on average give £157,500 mortgage subject to having no outstanding commitments and good credit score.
- It is worth applying for a decision in principle with your broker to make sure you will be accepted.
It is important you make sure that you can afford the repayment irrespective of how much the bank is ready to lend.
- Deposit. Nowadays the banks insist on the clients providing at least 5% deposit. To get a good competitive rate though, you will need to get 10% or even 15% deposit.
- Even than the rate is subject to your credit score.
Once you work out the budget and the deposit you need to find a property within your budget. As a general rule avoid properties with non standard construction like: large panel prefabricated concrete, steel framed, concrete ex-local authority blocks of flats, high rice (more than 5 storeys) ex-local authority flats, ex-local authority blocks with balcony/deck access. Most lenders do not like these types of properties and do not lend on them. Also generally avoid properties selling well under the average price for the area – there is often something wrong with them. Good way of finding properties is using the internet. The following websites offer comprehensive choice of properties: www.rightmove.co.uk, www.findaproperty.com. It is also worth registering with local estate agents.
Once you find a property and your offer is accepted it is time to see your broker and get started.