Owning a home is something everyone aspires to, whether it’s early on in life or as they get older, wiser and richer from years of paid employment. However, it’s a dream that not everyone can fulfil for one reason or another, with finance being the main issue. Typically, it costs over £100,000 to buy a house, and paying that amount all in one go is impossible for most.
To help spread the cost of home ownership, many eager house-hunters look into taking out a mortgage, but for first-time buyers in particular, mortgages can be confusing. Payable interest, the length of each mortgage and working out how much monthly payments end up coming to can rack many peoples’ brains.
One step at a time
The best thing to do when applying for a mortgage on your property is to take things slowly. That way, you’re less likely to miss something out. Here are the steps you need to take before getting hold of the mortgage needed to put you en route to owning a home:
Save up for a deposit. Lenders require that you should pay a lump sum equivalent to between 5-20% of the value of the home you’re interested in. The deposit will amount to several thousand pounds, so be prepared cut down on any extra spending and maybe go through some everyday saving guides. You can find them all over the web and they can help you adapt to a different lifestyle.
Try to distinguish between the different types of mortgage available: fixed rate, capped rate, variable rate and tracker. Also, consider how long you want your mortgage to last: a long-term one of at least 10 years will cost you more in interest but means lower payments over time.
Turn to the web for resources if you’re not entirely sure about which mortgage is right for you. The mortgage guides on Yorkshire building society website are pretty useful.
Work out what falls within your budget in terms of the total value of your property, the amount you have to pay for a deposit and how much monthly mortgage payments will come to. Mortgage payments amount to a few hundred pounds per month, so try to make room for them in your budget.
Look at schemes created to make home ownership more accessible if you’re struggling to get the funds needed to pay for a mortgage. The government’s Help to Buy scheme is particularly useful if you’re on a modest income.
Ensure that you have no outstanding debts and that you’re living within your means. This is essential because lenders are likely to check your credit rating before they decide whether to approve your mortgage. Your credit rating is the score where your credit worthiness is calculated depending on past experience with loans, credit cards and the like.
All of those steps should be followed with care and attention to detail. If so, and you tick all the boxes, you’re ready to get a mortgage and eventually move into your brand new home!