Buying a new home and preparing for your move is one of the biggest decisions you’re going to make in your life. While you might be raring to find the right place and get all the wheels moving, you should stop to make sure that your finances are in the right place, as well. Finding yourself not as equipped for the cost of the move can cause more delays than you need, so here are a few things to keep in mind.
Save Up a Deposit
Saving a deposit is one of the most crucial steps when preparing to buy a home. The average deposit required is typically around 5% to 20% of the property’s value. For example, on a £200,000 property, you might need between £10,000 and £40,000. Start by evaluating your income and expenses, cutting out non-essential spending, and setting up a dedicated savings account. Consider using tools like savings calculators to set realistic monthly targets and take advantage of schemes such as a Lifetime ISA, which offers a government bonus of 25% on your contributions up to £4,000 per year. Saving consistently not only gets you closer to your goal but also demonstrates financial discipline to potential lenders.
Get Your Credit in Order
Your credit score plays a significant role in determining the mortgage deals available to you. Before applying, check your credit report for inaccuracies or potential red flags that could affect your borrowing power. Services such as Experian can help you access your report. Improve your credit by paying off existing debts, ensuring bills are paid on time, and avoiding significant borrowing in the months leading up to your application. Registering on the electoral roll and keeping your credit utilisation low are simple steps that can also have a positive impact. A clean credit history not only increases your chances of approval but may also help you secure a better interest rate.
Explore Your Loan Options
Mortgages come in various types, and understanding your options is vital. Fixed-rate mortgages provide stability, while variable-rate options might offer lower initial costs but fluctuate with interest rates. Consult with a mortgage advisor like Evergreen Mortgages to explore what suits your circumstances best, including Help to Buy and shared ownership schemes that may be available for first-time buyers. Getting a mortgage in principle before house hunting gives you a clear idea of what you can afford and signals to sellers that you’re serious. Comparing lenders and using online mortgage calculators will help ensure you choose the most suitable and cost-effective deal.
Plan for the Costs Along the Way
Buying a home involves more than just the deposit. Be prepared for additional costs such as stamp duty (if applicable), solicitor’s fees, and surveyor costs. Some mortgage deals also include arrangement fees, which should be factored into your overall budget. It’s wise to have an emergency fund to cover unexpected expenses during the process. Beyond the purchase, consider costs for furnishing, decorating, or any immediate repairs the property may need, not to mention moving costs. Having a comprehensive financial plan helps ensure a smoother transition from offer to ownership.
Having your finances at the ready is crucial for your home move. Avoid any delays by taking the time to ensure everything is in the right place ahead of time.
