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First Steps To Moving On The Property Ladder
by Jason Samuel
http://www.awisemortgage.com
When we take on our first mortgage (in French meaning death
guarantee!) it is a huge step in our lives and one that we
could well still be paying thirty years later. Some people
thrive on the challenge, others fail to maintain the
repayments and have their homes repossessed whilst the
majority continue to plod through their lives moaning about
their repayments but contented to be home owners.
The first decision is whether you can afford the house
you've set your heart on and what type of mortgage is best
for you. The most important thing is to decide a budget and
stick to it. Although it's not easy, it's best if you can
not become too emotionally involved with the house! Many of
us see a property, fall in love with it and push ourselves
to the absolute limit and beyond to achieve the purchase.
Prepare a down payment. Remember that the more you can
save, the less you'll have to pay back. To feel comfortable
it's good if you can have a ten per cent deposit plus a
little more to cover your lawyer's fees and taxes.
It's also worth having a survey completed on the property.
Eventhough it can be expensive, it's much better to know
before the deal is completed and you're committed. It is
possible on some properties to have a one hundred per cent
mortgage and because competition is now so fierce it's
actually possible to negotiate a one hundred and twenty
five per cent mortgage which will give you spare money to
carpet and furnish the house. You have to be careful,
however. The chances are that the interest will be higher
and the property will have to be perfect (probably a brand
new build). You'll also be required to sign a Mortgage
Indemnity Guarantee (a MIG) which will add a percentage on
to your repayments and needs to be weighed up against the
opportunity to get onto the housing ladder.
Be clear about how much the monthly repayments will be.
Don't be swept away with the glamour of the deal. You still
need to live comfortably and pay your bills so work
strictly to you budget. If you can keep something aside for
a rainy day, you'll feel more comfortable (even if you
never have to use it). You'll have to decide what type of
mortgage is right for you. If you like to know exactly
where you are, then a fixed rate could help you. If,
however, you like to gamble, you can go for a flexible
loan. With this, you are likely to be better off at times
but you're vulnerable if the interest rate were to rise
steeply.
It's worth spending time and energy negotiating the best
deal. There are just so many companies offering variations
that it changes overnight (or even over the course of a
phone call) but a good deal can save you many thousands of
pounds. In addition to the savings, check that there aren't
penalties if you want to move to an alternative lender
before the term finishes.
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