If you have been renting for years, you probably have the process down to a fine art. Gather your deposit, look for a suitable house to rent, abide by the rules of the tenancy agreement, pay your rent on time and look after the property to the best of your ability until the tenancy ends or is extended. If you are thinking of shifting from renting to buying your own home, though similar in some ways, the process can look very different. Here is everything you need to know.
Understanding the Costs Involved
On average, the monthly cost of paying a mortgage is cheaper than paying rent but there are far more costs involved in buying your own home than continuing to rent. You will need to factor in the cost of getting a mortgage such as saving for a deposit, stamp duty, valuation fees and any legal costs involved in the process. Another important consideration is that any ongoing maintenance or structural costs that may arise in the future are now your responsibility. Owning a property is a huge commitment both personally and financially.
Bigger Commitments
A mortgage is one of the biggest financial commitments you will ever likely make. Do you earn enough to pay a mortgage every month? What changes in the future could affect your ability to pay? Are you able to save for maintenance costs should you need them?
Up until now you will have had the freedom to move around to different properties with a month’s notice to your landlord and whilst it’s not impossible to move when you own the property, the process is a lot more complicated, requires a lot more thought and takes longer.
Saving for a Deposit
Unless you are living with a family member to lower your rent and help with the costs of saving for a deposit, you will need to save for a deposit alongside your monthly rent payments. A mortgage deposit is typically 5% or more of the total purchase price so if the average property price in your area is £180,000 for example, you will need a minimum deposit of £9000 to get your foot on the property ladder. You will also need to consider how healthy your credit rating is and start taking steps to ensure your bank statements look healthy to your chosen mortgage provider.
Are you thinking about making the transition from renter to homeowner? It’s a lot to think about and whilst it might seem you have to put a lot of things in to place, an expert advisor can make the whole process easier and smoother. If you need some help and advice, our professional team are happy to help. Get in touch with us here for more information.