Buying Your First Home - Tips For First Time Buyers

The interest rates are at their lowest for more than 30 years. Lenders who want to secure your mortgage over a long term are keen to win your custom and offer particularly good deals for first time buyers. Sellers too are always keen to secure a deal with a first time buyer because your purchase does not depend on anyone else and therefore the likelihood of the sale going through is very high. If you set up an agreement in principle With a mortgage lender before you start viewing properties you are in effect a cash buyer and are in an excellent bargaining position.

The first step to buying your first property is to know how much you can borrow. Lenders usually agree to three times the first income or if you are buying as part of a couple, three times the first income plus the second income, or two and half times the joint income. However it is sometimes possible to borrow four or five times your salary. You can approach lenders yourself or you can enlist help from a financial adviser. This is usually a free service to you and by using someone who is experienced you may find the process less stressful.

When you know how much you can borrow be sure you can afford the mortgage repayments, the costs involved in buying a property and the costs of running a property.

Costs you will need to budget for when buying your first property include a deposit (normally 10% payable when the contracts are exchanged), stamp duty (1% if the property is between £125,001-£250,000; below this figure there is no stamp duty), a valuation fee to your lender (variable depending on what type of valuation you choose), your legal fees including local searches and disbursements (around £500) and moving costs (variable depending on whether you use a removal company or are able to move yourself). Once you are in your new home you are likely to need some funds for furnishings and decoration.

You will also need to consider the costs of owning a home. These vary according to your home and area. Common bills are council tax, maintenance, buildings and contents insurance, amenities (to include electric, gas, water and telephone). If the property is a flat or apartment then there may be service charges. Also insurances such as accident, sickness, life are available though not obligatory.

By Susy Copus
Published: 7/15/2006