Whether you are in the process of selling your house in order to buy another or looking to take that first step onto the property ladder, it is important that you have your finances in order before making this new commitment. To help with this here are the essential financial elements to be consider when buying a house, before you take the plunge and start house hunting and making any offers.
Decide On Your Deposit
Before you can even start working out a budget for your new dream property you need to decide how much realistically you’ll be able to put down for your deposit. If you are a first-time buyer it’s making an understanding of how much surplus income you have and can save monthly to build this lump sum up. If you already own a property you’ll likely have equity remaining from the sale of this which you’ll be able to use. So again it is all about deciding how much of that you’ll be putting down and if you have any other money you’ll be using as well.
Save For Associated Costs
When buying a house, it isn’t just the cost of the deposit you need to consider. There are other costs that you’ll need to cover. These include legal costs, possible costs attached to the mortgage you are applying for, survey costs, and then costs associated with the move as well.
Review Your Commitments
When looking to assess your finances and work a budget for savings or understanding how much you can afford to pay on the new mortgage, it is important to know exactly what is coming in and the outgoings that will continue. When doing this it is important to be fairly cutthroat. If you don’t need it or use it, cancel it. So those magazine subscriptions that are piling up and going unread, cancel. Over time every penny saved will add up.
Keep A Separate Savings Fund
Although, the aim is to budget for the new dream house it is important to keep a smaller separate savings fund to one side. You never when those unexpected costs will crop up and it is important that you have the funds available to cover these without eating into savings or the money budgeted for the new house. Whether this is car repair costs or hiring the most reliable truck accident lawyers in town. These savings don’t necessarily have to be huge but having something set aside will benefit you if something does arise unexpectedly.
Understand How Much Of A Mortgage You Can Have
Even with a deposit saved, it is important you know how much you can borrow for your mortgage as this with your deposit will determine your overall budget for how much you can spend buying this new house. To help with this you can either approach the bank directly and with their guidance be told what size mortgage you can afford. Or alternatively, you can seek the guidance of a financial advisor or mortgage broker or will be able to help with this and support your application process.