Purchasing a home – The mortgage process
There’s no doubt that the biggest financial decision
you’ll make in your lifetime (if you’re lucky enough) is to buy
your own home. It is a process that can test your patience and your
purse strings, but one that is certainly worth it at the end.
you’ll make in your lifetime (if you’re lucky enough) is to buy
your own home. It is a process that can test your patience and your
purse strings, but one that is certainly worth it at the end.
There are various stages to buying property, the first
being the all-important stage of choosing a home or apartment that you
feel you can live in for the foreseeable future; so you need to consider
elements such as the local area, crime levels, council tax and even
things we take for granted such as parking.
After this stage comes the purchase, and how you go
about it often depends on your circumstances, and as a result, many
banks and firms will offer you different options.
about it often depends on your circumstances, and as a result, many
banks and firms will offer you different options.
Getting a mortgage
Unless you can afford to pay for a home in one lump
sum (“yeah, right!” I hear you cry), you will need to get yourself
a mortgage which is a long-term loan to help cover the cost of the house,
flat or apartment.
sum (“yeah, right!” I hear you cry), you will need to get yourself
a mortgage which is a long-term loan to help cover the cost of the house,
flat or apartment.
With a mortgage, the initially worry will be how much
of a deposit will be required; with lenders usually asking for between
5% and 25% of the property’s value up front and the rest to be paid
in monthly installments.
of a deposit will be required; with lenders usually asking for between
5% and 25% of the property’s value up front and the rest to be paid
in monthly installments.
There are three kinds of mortgages that include fixed
rate, variable rate and interest only.
rate, variable rate and interest only.
- Fixed
rate: This can be a great option to take if rates are low enough,
but not worthwhile if the repayments are out of reach. Periods for a
fixed rate mortgage usually last between one and 10 years. - Variable
rate: Repayments through this method will fluctuate depending
on the Bank of England’s base rate, but the maximum rate will depend
on the lender you are with and you can switch leaders if you please
during this option. - Interest
only mortgage: Use this method if you wish to borrow more than
you would with the other two, as you will only pay back the interest
and not the loan itself.
The actual amount you can borrow from lenders will
depend on your status; for example, if you are living alone, you can
lend up to three times your annual salary (although with a clean credit
record this can sometimes go up to five times your salary). Buying a
house as a couple offers more allowance of the amount you can lend;
in this case, you will be able to borrow three times the main income
and up to two times the secondary income the household brings in.
depend on your status; for example, if you are living alone, you can
lend up to three times your annual salary (although with a clean credit
record this can sometimes go up to five times your salary). Buying a
house as a couple offers more allowance of the amount you can lend;
in this case, you will be able to borrow three times the main income
and up to two times the secondary income the household brings in.
Lenders will ask for a professional valuation of the
property you are in the process of purchasing in order to determine
their investment with you and will be arranged by the lender themselves,
but it will be your responsibility to pick up the bill. A detailed survey
can also be undertaken at this stage and will ensure the safety of the
building’s structure.
property you are in the process of purchasing in order to determine
their investment with you and will be arranged by the lender themselves,
but it will be your responsibility to pick up the bill. A detailed survey
can also be undertaken at this stage and will ensure the safety of the
building’s structure.
