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Buying a house is one of the biggest decisions you’ll ever make. It ranks as one of the highest causes of stress and is even reported to be more stressful than bankruptcy, divorce and even bereavement! Getting on the ladder is not easy either. The average house price in the UK is £218,225, and this rises to a whopping £650,000 for a home in London, so saving for a large deposit seems harder than ever.
The good news is that there are positive steps you can take to get yourself in a position where you can buy your first home, and how you can minimise the stress when you start the buying process. Here’s some top advice that can help get you your home!
Buy or rent?
The very first thing you should consider is if you really want to take the plunge into home ownership. Although renting has its downfalls (like not necessarily having a long tenancy, not being able to decorate or make permanent changes, and of course the expense), there are benefits too. Renting enables you to have more flexibility than being a homeowner. You can move around more freely if you need too. You also have the option to adapt to your budget by being able to move if your circumstances change. But one of the main reasons people choose to buy is to make their monthly payments go towards something they actually own at the end of the mortgage term. In some cases, the cost of renting is much higher than the monthly mortgage payments
Saving for a deposit
Once you’ve decided you want to buy a house, you’ll need to have a decent enough deposit before you can get a mortgage. Some mortgages only need you to have a 5% deposit (so just 5% of the value you want to borrow), but you’ll find the best mortgage deals come to those who have a higher deposit (usually around 10%-15%). To make sure you can actually save for the deposit you should first take a detailed look at your finances by creating a budget. List everything that you buy or pay for, then make cuts where you can and save the cash in a separate account (Monese is great for this!).
Getting a mortgage
What comes first – finding a house to buy or getting a mortgage? Well, it’s a tale not dissimilar to the chicken and the egg. To get a mortgage you need to have found a house you want to buy, but to buy a house, you need a mortgage! So what do you do? The answer is to get a ‘mortgage in principle’. To get this a mortgage lender will run a credit check on you, find out how much deposit you have and then see how much, and on what terms they will lend you the money. The reason why this is important is because it means that any potential buyer will see that you will have the funds available to buy, and this could give you the advantage over other buyers when it comes to making an offer on a property.
One thing to be aware of is that there are various types of mortgage and not all will be favourable for you, so it really is a matter of finding what works best for you, and what level of risk you are prepared to take.