Anyone that is thinking of purchasing their first home has a very exciting new chapter in their lives to look forward to. However, before you can start this new chapter there is a lot to do and organize. The first things you have to do are sort out your finances and determine whether you can actually and realistically afford to move into your first home. Remember, failing to keep up with mortgage repayments could mean losing your home, so you really need to be sure with regards to affordability.
It is always best to get a mortgage loan agreed before you start looking for a property. This is for two key reasons. First of all, finding out how much the bank is prepared to lend you means that you can focus on properties that are within your price range rather than wasting times on ones that you would not be able to afford anyway. The second reason is that if there are several people interested in the same property, the buyer is more likely to favor you if you already have a mortgage agreed rather than going with a buyer that has yet to make an application.
Working out the rest of your finances
Before you even make your application for a mortgage, you need to go through your finances very carefully. This will enable you to determine how much you can afford to put toward mortgage repayments so you have a better idea of how much to apply for. Since this is your first home and mortgage, you may not be used to other costs that have to be taken into consideration. However, it is vital that you do this because these are essential costs that also need to be paid each month in addition to your mortgage payments.
If you are moving in and getting a mortgage on your own, you only need to take your own finances into consideration. If you are getting a joint mortgage with a partner, you need to take both incomes into consideration, which is what the bank will also do when deciding on your mortgage application. Some of the key additional payments you have to consider when working out affordability include:
- Gas and electric
- Broadband, landline, and TV
- Weekly groceries
- Home insurance costs
- Travel costs (car running costs or public transport costs)
- Car insurance
- Any other insurance plans (e.g. pet insurance, medical insurance, dental insurance)
You should go through all of your other costs as well and account for any regular payments you have to make such as your mobile phone costs. Also, make sure that you are not just scraping by, as if you fall short of money on month you could end up being unable to meet repayments on the mortgage or on your essential bills.
By going through your finances first, you can enjoy greater peace of mind and a better financial situation once you move into your new home.
