Looking for your first home is always an exciting time. However, given the lack of experience in making such an expensive purchase, many first time buyers will inevitably make mistakes. Here are just a few of them that first-timers make and how you can avoid them.
Having expectations that are unrealistic
It’s easy to forget about the hidden costs of buying a home. First of all, you have to be able to afford it. We aren’t only referring to mortgage payments, but council tax, home insurance and utility bills can add to the hidden costs of buying a house.
You can calculate a rough estimate of what you’ll be forking out each month on those hidden costs online. Add them together and decide if you earn enough to make those monthly payments. You’ll also have property service charges and solicitors fees to pay. Don’t get stung by costs you aren’t yet aware of.
Emptying your savings account to put a deposit down
Although this may seem like a good idea, it isn’t. We’re sure you’d rather pay a bit extra on your mortgage payments each month than deprive yourself of a financial buffer. It’s tempting to scrape all of your money together to make a larger percentage down payment, but this tactic will leave your savings account empty.
Everyone needs a rainy-day fund, they’re important for many reasons, mainly financial stability. Therefore, it’s very important that you still have that buffer in place for anything from holidays to utility bills.
Not seeking professional help
This is a necessity when it comes to first-time buyers. Seeking professional advice is the easiest step to make when looking to buy your first house. Find a reputable estate agent, a knowledgeable mortgage broker and a good solicitor.
Mortgage brokers specialise in this area, they have in-depth knowledge about the market and individual lenders, ensuring that the help and advice you’re receiving is legitimate. Some brokers offer their services for free, but the majority will ask for a fee (adding to the list of hidden costs).
Being unaware of your credit score
Buying a home will be the biggest financial commitment of your life. Therefore, the mortgage lender is going to ensure that you can pay back the money they’ve lent you. To prove that you’re capable of making regular repayments, you will have to provide them with some evidence, this includes bank statements.
They’ll check everything, from phone bills to monthly gym membership fees. You also have to prove that you aren’t spending outside of your means, spend only what you can afford. Knowing your credit score early can enable you to improve it, making you look more favourable to mortgage lenders in the future.
Look at your monthly earnings (after tax and NI), add up all of your outgoings and note that figure down. Your next job is to budget. Don’t spend more than your budget allows and try to avoid overspending on food and luxury items.
Failing to shop around for the best mortgage deal
Finding a mortgage that is right for you can seem like a rather daunting task. Being bombarded with so many numbers can lead the majority to go directly to the lender they already bank with, or to the first one who accepts your application. But shopping around could lead to a deal which could save you thousands of pounds.
Once you’ve secured your new mortgage, it’s important to keep on top of repayments. However, the initial rate you received will revert back to a less attractive one – the Standard Variable Rate (SVR) – after two or five years. The best way to avoid lapsing into the SVR is to remortgage, switching to a better deal before your initial one is revoked. Remortgaging is now as simple as switching energy providers, so don’t be put off.
Barnes of Lincoln provide a comprehensive home removals service to customers throughout Lincoln, Newark and beyond. We’re dedicated to ensuring the safety of your belongings, taking extra care both before, during and after transportation. We also specialise in packing materials, we offer an extensive range of linen bags, cartons and bubble wrap, to name a few. To find out more, don’t hesitate to contact us today – we’re more than happy to help.