Nowadays more and more people are able to afford to buy a home of their own. This is not because they are making more money, it is simply because the choice and range of loans and mortgages available have increased exponentially. This is partly due to the fact that it is no longer banks and building societies that hold the monopoly on mortgages.
The UK mortgage market is now full of specialist mortgage lenders, non-bank financial institutions and other lenders that are competing to provide homebuyers with the best possible deals. The internet has also provided potential homebuyers with an abundance of information and comparison tools that were not available before.
The first step is to determine how much you will be able to spend on a home of your own. This process has been simplified with the internet, where there are many free affordability calculators available to do this task for you. You will need to know how much money you have saved or have available to use as a down payment on your home. Next, you will have to know what your monthly or annual salary is and what monthly expenses you have.
Generally, lenders are willing to lend two to three times your annual salary for a mortgage, on average with a term of 25 years. However, don’t use the lenders maximum mortgage as the amount you will be spending on a home. From that you will have to decide what amount you can comfortably afford – keeping in mind to have enough of a buffer for unexpected expenses, such as medical emergencies or redundancy.
You will most likely have had preliminary talks with a mortgage lender, to make sure you qualify for a mortgage. They will check your credit standing and employment history and in many cases pre-qualify you for a mortgage. This is important, as some sellers will want to see that you have financing in place before they even look at your bid – they want to make sure that they are not wasting their time or turning down ‘real’ potential buyers of their property.
When selecting a property think of location, public transport, security, proximity to schools as a guide towards the potential value of your property. In effect, the property you will be buying will be your home, but it will also be an investment!
After pinpointing a property you will have to talk to you mortgage lender and finalise your loan. Make sure you look at all the options and types of mortgages available to you, so that you can choose the loan that is most suited to your personal needs and financial standing. The actual exchange of contract can be done in a matter of weeks, much faster than you think, and you will then be a proud new homeowner!