This is a collaborative post
With so many young and middle-aged adults renting than ever before it can be difficult to know when the right time to buy a house is, or if it’s even possible. But if you have a dream of being a homeowner then there are steps you can take to reach your goal.
You will want to make sure that your income is stable and that you earn enough money to be able to make your payments each month. Most mortgage companies will want you to have been in your current job for at least 3-6 months but some may only accept people that have been with the same employer for several years. If you are self-employed then you will need to provide more information to satisfy mortgage companies that you can afford the payments.
Before you even start to load up Rightmove and start dreaming about all those properties that are magazine shoot ready and, well, sorry to say, out of your budget, you need to get clear on how much you can afford. Be realistic. There is no point disappointing yourself by falling in love with properties that are out of your price range. Work out what your payments will be before you go and see places. Make a detailed plan of how much income and expenses you have each month. Include all your regular payments and make sure that your mortgage payments will be a manageable proportion of your income. Don’t forget to include the extra payments that you may gain when you purchase a home, like an increased council tax band, or maintenance fees if you purchase a flat.
Pay off Debt
While having existing debt may not be a deal-breaker when applying for a mortgage you may still want to pay off existing consumer debt first. Having fewer monthly payments will put you in a better financial position. You will need to make sure that you can easily afford all your expenses.
Have an Emergency Fund
Fail to plan and plan to fail, and isn’t that so true? You can just bet that if you buy a house with every last penny you own then something will go wrong. The boiler may break, or the roof may leak, or something else will happen. It may not be something that goes wrong with the house but an emergency fund will also provide a buffer for you if you lose your job and have no income for a while. You’ll still need to keep up your payments so do yourself a favour and get all your ducks in a row before you make the largest purchase of your life. 3-6 months of expenses is usually a good amount of cash to keep in your emergency fund depending on your own individual circumstances.
Have a Decent Deposit
Building up a good chunky deposit can help you get better interest rates on your mortgage and reduce the time you spend paying it back. There are some great Government schemes that allow you to get free cash when saving for your first home, such as a LISA. LISA stands for Lifetime ISA and allows you to put in up to £4000 a year and the Government will top up with an extra 25%. That’s up to £1000 of free cash a year! It needs to be opened before your 40th birthday but can be used to save cash for your first house up to age 50. And even better, if you have a partner they can open a separate LISA and get their own 25% bonus. You can then use both savings pots for one house that you apply for together. That’s a pretty great deal.
One of the many perks of renting is having the flexibility to up and go at a moment’s notice. Well, within your tenancy agreement anyway. This is great if you want to try out a different area or move for a new job. When you buy a house you want to be sure that you can see yourself living in that same house, and area, for a good few years. If you are thinking about moving to a new area but are not 100% sure on whether you want to purchase a home there you could always rent for 6 months first to get a good feel for the place.
Have a Moving Budget
Moving can get quite expensive and buying a house can accrue extra costs as well. Make sure that you don’t forget to budget for these. Some of these costs include the following things:
– Stamp duty
– Legal fees
– Removal costs or hiring a van to move your belongings
– Decorating and furnishing costs for your new home
Enjoy The Process
Buying a new home, whether it’s your first or you have moved several times, is such an exciting thing to accomplish. Enjoy the process and make things easy for yourself by labelling the box that has the kettle in!