Buying property will undoubtedly be one of the most expensive things you do in your life. Due to this fact, it is not something that should be rushed into. You must dedicate time and effort into budgeting for this epic purchase so that you don’t end up with serious financial problems down the line. If you are a first-time home buyer, here are some beneficial budgeting tips for you.
Improve your credit score
Your credit score plays an important role in determining whether you will be approved for a mortgage and the rate of your mortgage. If you have a bad credit score, you are likely to be refused a mortgage, or you will be offered a loan but at a very high rate. All prospective homebuyers should check their credit history. You can access your credit report from major credit rating agencies, such as Experian or CallCredit. With your report look for any mistakes and take the necessary steps to correct them. Luckily there are many things you can do to improve a bad score, for example ensuring you pay all your bills, and on time.
Become very familiar with your current financial situation
This means sitting down and making accurate calculations of your monthly income and outgoings. This will give you a realistic idea of what mortgage rate you can comfortably afford. There are many tools online that can help you manage your financial situation. For example, you may wish to use an online mortgage calculator that will help you out what you can afford based on your current financial situation. Additionally, book an appointment with your bank to discuss your financial situation and what you can reasonably afford.
Building on your savings is an important step in buying a home. The bigger your deposit, the less you will need to borrow from the bank. If your current financial situation means you can’t afford a deposit for a house, plan a monthly budget that will see you require you put a certain amount aside each month in savings. Additionally, look for areas where you can save. For example, could you reasonably reduce your monthly phone, electricity and gas bills? Can you cut out any expenditure altogether?
Consider all the costs involved
As well as the deposit payment and the mortgage installments, there are many other one-time and ongoing costs that come with buying a home. In terms of one-off costs, you must pay Stamp Duty Land Tax on your purchase of property. You will also need to pay solicitors fees for dealing with the legal aspects of buying a home. Regarding ongoing payments, you must factor in council tax bills, insurance costs and utilities. Many first-time home buyers find themselves in financial bother after buying a house because they haven’t budgeted adequately for all the costs involved. You should make it your mission to educate yourself about all the fees involved in buying a home so that you don’t end up with a nasty shock.