If you are buying a home for the first time, then you need to know what to expect. If you do not, then you could be taken by surprise and your transaction could fall through. There are some points that you need to know which will help you anticipate what will happen.
The Deposit You Need
No first time home buyer is going to get a 100% mortgage, and this means that you are going to need to put down an initial deposit. The initial deposit will be between 5 to 20% of the cost of the home you are looking to buy. The higher the deposit you have, the lower your monthly mortgage repayments are going to be and the more likely you are to be approved for the loan.
Getting Your Mortgage
When you look at mortgage options, you need to find a reputable broker as they have access to more mortgage deals than you. It is important that you find a broker that is not affiliated with a lender because the ones affiliated to lenders are going to be offering that lenders products only. A good unaffiliated broker will be able to help you determine the type of mortgage that you should get and which lender you should choose.
The type of mortgage that you get is very important because it affects the repayments you make each month. There are two primary types of mortgages available, and they are fixed rate and variable rate. The fixed rate will have a single interest rate for the entire term of the loan while a variable rate mortgage will have a changing interest rate depending on the market. When you have a variable rate mortgage, you may need to make a higher repayment from one month to the next.
Budget For All The Costs
The full costs of buying a home are where first time buyers are caught out. When you buy a home you are not only going to be liable for the mortgage but some other fees as well. These fees will include the mortgage arrangement and valuation fees, the fees for the lawyers, the costs of the property survey and any land transaction taxes in your area.
You will also need to consider monthly fees that you will face once you own the property. You will need to have building insurance, and if you are looking to rent the property out, then you also need landlords insurance. Some areas also have rates and taxes that you need to pay either monthly or annually.
Looking For A Property
Most first time home buyers believe that looking for a property is the easy part. While it is considered easier than securing financing, there are certain points that you need to consider. The primary point to consider is whether you are buying a freehold or a leasehold property.
A freehold property is the one that you want to buy because this means that you own the property and the land the property is on. A leasehold property is different because you are buying the property and land for a set amount of time from the freehold owner. Not all areas have leasehold properties, but it is important that you understand that this is something you have to look into.
There are some points that first time home buyers should expect. You need to know about the deposit you have to have as well as the type of mortgage that you should get. All of the costs of buying and owning a home also need to be taken into account before you start the process.