If you are a first time buyer, then you will naturally focus on how much you can afford to pay for a property. This helps to narrow down the house hunt, and prevents you from wasting time looking at areas and properties which are beyond the means of your mortgage potential.
To get a ballpark figure of the amount you can borrow, you can use online mortgage calculators, which will ask about your salary, other financial commitments, and how much deposit you have to put down. Typically, a first time buyer will have a deposit of 10% to 20%.
It’s also a good idea to check out your credit score. This is a record of your financial activity over the past six years, including any previous loan applications you have made, whether or not they were successful. If you have any outstanding debts, clear them as soon as possible, and make sure that you have direct debits set up to pay all your bills on time.
However, there are other expenses involved in a property purchase, which can amount to a considerable sum. It’s best to budget for them early on in the process, so that you are not caught out by any nasty surprises which may end up throwing the whole journey off course. Here are some of the main hidden costs to factor in to a property purchase.
One of the biggest extra costs is the conveyancing fees, as you will need to appoint a solicitor to deal with the legal aspects of the property purchase. The average cost ranges from £500 to £1,500. If the property you are purchasing is over the stamp duty threshold of £425,000 for first time buyers, you will need to pay 5% tax on the next £200,000.
The next biggest cost is the home buyers survey. This is a report on the overall condition of the property, which will highlight any maintenance work which needs doing, and help you decide if you are paying a fair price for it. There are different levels of survey, from a basic overview to a full structural survey, with costs ranging from £500 to £1000+.
In most cases, a mid-level 2 survey is the standard choice. This will highlight any serious issues such as damp and subsidence, and any breaches of building regulations. If the property is over 50 years old, or in bad condition, it’s advisable to get a full structural survey carried out.
It’s a good idea to work out your removal costs at an early stage, especially if you are in a rented home with most of your own furniture. The cost of hiring a van will depend on the distance you are moving and how much you need to move. If you are in a fully furnished rental, you may be able to move with the help of friends and family with large cars.
Insurance is another factor to consider. You will need home and contents insurance, and may want to consider taking out insurance policies on your mortgage.
For example, a life insurance policy will pay out a lump sum in the event of your death, and critical illness cover and income protection insurance are designed to help you meet the mortgage repayments, should you fall ill and are unable to work.
If you have dependents, then taking out one or more of these policies is usually recommended by mortgage brokers. This is because if you lose your income, your home may be in danger of being repossessed if you are no longer able to meet the mortgage repayments.
It may not be a particularly easy issue to think about, but it can make a huge difference to families who are already enduring huge grief. TV presenter Jonnie Irwin, who has been diagnosed with terminal cancer, recently spoke to the media about how glad he was to have put a life insurance policy in place.
Jonnie, who is married with a three-year-old son and two-year-old twins, said: “That has helped so much and when I leave this planet, I’ll do so knowing Jess and the boys are in a house that is fully paid off and there’s a bit of money in the bank for them to live off.”
A life insurance policy will be peace of mind that your loved ones will have enough financial security to remain in their home, should they sadly be bereaved.
If you would like to talk to mortgage brokers for bankruptcy, please get in touch today.
Your home may be repossessed if you do not keep up with your mortgage repayments.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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