09 November 2020

Things New Homeowners Should Do in the First Time

Becoming a home owner for the first time is both a scary, exciting and confusing prospect. It is something that we all look forward to and yet because it is our first time, as it can be with anything, we are unsure what to expect. Here is a perfect guide to take you through what you should know about owning your own home.

Before you even take a look at a house you would like to buy, it is always wise to have saved at least around 10%-20% as your deposit. The trick here is that the more you have saved, the more likely it is that you would qualify for a cheaper mortgage, as you have a head start. If you have a nice amount saved up as your deposit, the next logical step is to look at your monthly repayments to see if they are something that is viable for your financial position, at this moment in time. A lot of people can have a decent chunk of cash saved up, yet when it comes to the repayments, end up falling short and sadly, have their house repossessed. Not you. You want to start your new life on the best possible footing. When you apply for a mortgage, the lender always checks your credit and desires to see proof of your monthly income, be it from paid employment or a business as well as running you through something that is known as a stress test, to see how would cope with “life’s challenges”, say if you had children, the rate to pay back monthly suddenly went up or you became redundant.

A lot of people wanting to become new home owners find themselves solely focused on saving for their deposit and repayments, however missing out all the other attached expenses and tariffs that come along with home ownership. The following should always be taken into consideration: Solicitor’s fees, Stamp Duty, removal costs, valuation fees including mortgage re-evaluations as well as building insurance and furnishing/decorating costs. All these fees add up to a significant amount when put together and being prepared for them, will eliminate any form of “surprise stress” when it comes to proceeding forward with your application. Putting all the costs down on paper tremendously help, because once fees and costs are on paper, it is much simpler to budget appropriately for them.

When you buy a house, the type of lease that transfers into your name, directly impacts how much you would be paying overall. There are two types of leases. Leasehold or Freehold. A lot of times for new home owners, they often have leasehold which means that you own the property and the land it is based on, making you legally responsible for any rates, repayments or any other taxes attached and/or associated to the property. If it is not leasehold, then it will be freehold which simply means that you will be buying into a share of it. Freehold is often common with junior landlords that have bought a slice of property and rent it out to their own tenants. Most likely, whilst in the process of new home ownership, you will be part of leasehold where the lease is directly in your name.

Buying a house has quite a few processes, however if you are financially prepared and are able to show the bank that you are able to make repayments based on your monthly income or if you are self-employed, your tax returns from your accountant; home ownership will welcome you with open arms.

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