Finding a suitable property
How to Find a Property
If you wish to get on the property ladder, the best options are to contact a local estate agent and check local press for details of suitable properties in your area.
When you have found a suitable property, make an offer through the estate agent and make your mortgage application with your chosen lender.
How Much Do I Need
Take proffessional advice from your bank or building society and obtain some indication as to the amount that they are prepared to lend you and the methods available to you to pay back the loan.
The loan will be limited by the value of the property and your income. The maximum is usually 2.5 - 3 times your annual income and one time your partners income, or 2.5 times your joint annual income.
- Types of mortgage
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There are two main types of mortgage:
Repayment Mortgage
The mortgage is repaid in monthly instalments over an agreed number of years, between 15 and 25 years. Part of the repayment repays the capital (the amount borrowed); the other part is interest.
It is advisable to take out a Mortgage Protection Insurance Policy to pay off the mortgage should you lose your job or die.Endowment Mortgage
Only the interest is paid during the period of the loan. The capital is paid back in a lump sum at the end of the mortgage period. An Endowment Life Assurance Policy is taken out to provide this sum, but there is no guarantee that the amount will be sufficient to cover the loan at the end of your mortgage.
Interest Rates
Lenders frequently offer special rates of interest; the main four are listed below:
- Variable Rate - it can be varied at anytime without notice.
- Discounted Rate - a discount rate is usually set for 1-2 years, before reverting to a variable rate.
- Fixed Rate - the rate is fixed for a set period of time, usually 1-5 years before reverting back to a variable rate.
- Deferred Rate - payments are reduced for up to the first 5 years, the difference is added to the total mortgage and is charged after the deferred period.
- Cost of Buying your Home
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There are some "One Off" Costs:
- Indemnity Insurance (for mortgages over 70-80%
- Valuation Fees (starting at approx £250.00)
- Structural Survey (if applicable)
- Estate Agents Fees (variable and paid by the vendors)
The Survey
Before offering a mortgage, the bank or building society will require you to pay for a survey or valuation. This survey will tell the lender whether or not the property is worth the amount you are asking to borrow and if it is likely to last as long as the mortgage period.
For your own peace of mind, especially if you are worried about the property, you can arrange for a full structural survey to be carried out. This survey is much more thorough than a normal survey and is therefore, more expensive.
Legal Costs
- Solicitors Fees
- Land Registry Fee (variable, depending on the value of the property
- Land Search Fees
- Stamp Duty
Recurring Costs- Mortgage Repayments
- Building Insurance
- Contents Insurance
- Service Charge/ Ground Rent (where applicable)
- Repairs and Maintenance
- Council Tax
- Water Rates
- Utility Bills (Gas, electric, telephone etc)
- TV Licence