Becoming a home owner for the first time may seem like an exciting (and sensible) financial decision, but is it the right decision for you? Here are a few things to consider before deciding to buy your first home.
1. Can you afford to buy?
There are a lot of costs involved when purchasing your first home. Whilst the deposit is usually the largest expenditure, don’t forget about the extra fees involved with the actual purchase of the property. These could include mortgage arrangement and product fees, valuation fees, stamp duty (dependant on the property value), solicitors’ fees, and removal costs.
And that’s before you’ve even moved in. There will be continued expenses once you’ve moved into the property, such as home insurance, council tax, and utility bills, all of which need to be considered when deciding whether or not to purchase a property.
2. Are you buying for the right reasons?
The thought of choosing your own home and being able to put your own stamp on it is very exciting, but have you considered the time and cost of home ownership? Owning your own home is a significant responsibility - and remember, if the shower begins to leak or the central heating breaks down, it’s down to you to get it fixed.
3. Can you afford the monthly mortgage repayments?
When you apply for your first mortgage, mortgage lenders will apply strict affordability checks. It is therefore vital to put together a budget planner before applying for your mortgage. Lenders will not only want to know how much you take home each month, but also what you spend your money on. They will also check to see whether you can still maintain your repayments should interest rates increase in the future.
4. Is buying a better option than renting?
If you are new to an area, there’s no harm in renting for a period of time so that you can get to know your surroundings. This may help you to decide where you want to live further down the line. Renting gives you flexibility and additional time to make those long term plans.
When you rent a property or live at home, you are relatively free to move at short notice. Once you own a property, you would need to either sell your property and purchase another, or get permission from your mortgage lender to rent out your home. If you need the flexibility of being able to move at short notice, it might be worth waiting before you buy.
5. Buying with a partner or a friend?
If you are considering buying your first home with a partner or a friend, it’s important to be aware of what would happen if one of you decides they no longer want to live in the property, or may not be able to keep up their payments. There are different ways to set up the ownership of your property, so always take legal advice before you make the decision to pool your resources.