If you’re looking to become a first-time buyer, the future of housing can be daunting. Even the topic of housing can lead you into a cold sweat. It can seem like there are so many opportunities or paths for you. Sometimes, the amount of information available to yourself might not help, but only serve to confuse you further. That’s not to mention the amount of horror stories lurking around.
But people still manage to buy homes and live happy lives! That can be you.
If you’re looking for a way out of your parent’s household, renting is a great option. Just remember that buying is mostly always going to be better than renting a property. That being said, If you have an affordable monthly rent and are happy with your lifestyle, you might want to hold off on buying for a while.
A common misconception is that if you’re renting, you’re throwing away money. To the outside, that might seem true – but the truth is that if you buy a house, you’re still going to be paying tax and insurance – two things which aren’t going back into your pocket. Don’t be led astray by this line of thought. It’s still better to buy than rent in the long run though, because the true benefit of purchasing a home is that the monthly payments will eventually stop. You will eventually own a home. That’s a feeling that you can buy.
But, how do you get started? How does one own a home? Well, you don’t walk to the bank with a sackful of cash, that’s for sure. You need a mortgage.
A mortgage is a loan that a bank gives you to secure your home. You then pay this off over a set period. Banks used to be a bit wild with these and that led the world into a banking crisis. What happened was that you used to be able to secure a mortgage without a deposit or down payment. The more people that were given these loans led to the more people that couldn’t pay off these loans. That left banks without money and the constant bailouts we saw in the late 00’s. Now, you need to secure the loan with a hefty down payment. That’s likely for the best.
What type of mortgage can you get, though? What home can your mortgage secure for you? That all depends on the size of your down payment and your annual salary. The more you earn, the more you’ll be lent. The bigger the deposit, the less you’ll have to pay back. It’s a simple science, but you’ll have to research mortgage rates to truly get to grips with the system.
That’s not all, though; there are plenty of other costs when you purchase a property. You’re not only going to have to pay for a site inspection and appraisal of your new house, but you’re going to need to pay the estate agents and solicitors involved in the sale. The costs rise and even though some can be rolled into your mortgage, the inspection of the site and a credit report are going to cost you.
The key to getting your first home really is saving. The more the save, the bigger your down payment. This will save you a lot of headaches and open up the market to you. If you’ve got a partner, that’s great news – since two of you can work together to save. If not, try not to worry – you’ll be able to save anyway. Cut down your expenses and examine areas where you can afford to spend less. Go for the cheap options and boost your savings balance. Cut down on the parties and concerts. Try to wait for sales to buy new video games. You can always cut down! No-one said saving is easy, but you’re the one who wants to buy your first home!
A huge issue here would be your credit rating. Remember that an enormous loan needs to be secured in order for you to purchase your new home. Bad credit will scupper your chances of this. Your credit can be repaired with time, so make sure you are on time with your payments and that old information is wiped (by law it has to after a number of years, check this) from your credit report.
Buying a new home is a hassle, but if you save well and spend smartly, you’ll get there in no time at all. Invest wisely and pick your perfect home; you may be there for life!