For most of us buying a house will be the biggest investment we make in our lives. That’s why it is vital to do the research and work out all the numbers before jumping in. Careful planning can avoid a lot of heartbreak in the future.
Filled with longing at the prospect of owning your own home? It is possible; after all, millions of people have done it. But it’s imperative that you work out exactly how much you can afford before you set your heart on the home of your dreams. Getting the mortgage is obviously the major hurdle, but the repayments are not the only cost. There are lots of other things that have to be factored in before you can start house hunting.
Work out exactly how much money you have coming in and all your regular expenses, with leeway for unexpected expenses and disasters, such as a car crash. Be cautious. You might be able to raise the asking price of the house you want, but will that might mean you will have to live in dire poverty for the next 15 years? Then there are the other costs of buying. These include: The deposit (at least 5 per cent or more) valuation fee, legal fee, survey fee, stamp duty, conveyancing, mortgage account fee, buildings insurance (which the lender will insist on), removal costs and a 10 per cent contingency fund for unforeseen expenses. It all adds up.
Then dip your toe in the water. Don’t rush it. Work out where it is you want to live and do some research. Ask questions of experts in the area. For instance, a first time buyer in NI would be going to estate agents in Belfast or Londonderry. At the same time, save like mad to get as big a deposit as you can. The larger the deposit, the smaller the mortgage. Save, save, save. Go through all your expenses and get rid of the ones you can do without. You don’t actually need a new television, a new car or a long foreign holiday. Make the house your first priority. It will be worth it in the long run.
Another thing to consider is how secure your job is. The bald fact is that if you cannot keep up the mortgage repayments, you will eventually lose the house. So if you lost your job, or were off work due to illness or injury, how would you pay? An income protection policy would safeguard you, giving you an income if you were unemployed or too ill to work.
But it is not all doom and gloom. Despite the recession, lending to first-time buyers rose by three per cent at the beginning of the year. For six consecutive months, first-time buyers have accounted for more than 40 per cent of all house purchase loans. The latest budget has introduced the Help to Buy scheme intended to boost the availability of mortgages by loan guarantees.
Monica is an experienced business and property writer. She has been writing for real estates and industry websites and printed media . She suggests the first place a First Time Buyer NI should begin their research is the internet.