Buying your first home can be exciting, terrifying, and joyful all at the same time. But most important, it is an expensive venture. And for many people, they spend a lifetime trying to pay off the loan taken to purchase their home. But that doesn’t have to be you. By following the tips below, you can join the ranks of first-time UK home buyers that saved thousands of pounds on their home purchase.
- Shop extensively for a mortgage
The type of mortgage you opt for to finance your home purchase will greatly influence if you end up with a burdensome debt or if you save money. Typically, you should aim for a mortgage that offers the best interest rates available as well as less restrictive clauses. Also, opting for a shorter term mortgage plan can help you save thousands in the long run.
- Add a contingency clause to your mortgage
This contingency clause will protect you in the event you lose your job or other source of income that was being used to finance your mortgage payments. It also protects you if the loan falls through and allows you to get back money already paid to secure the house. You should only go for a mortgage provider that is willing to accept this clause.
- Pay for a home inspection
Many first time home buyers see a home inspection as an unnecessary expense. It is in fact a very worthwhile investment. Not only will a professionally performed home inspection provide you insights concerning the actual market value of the home thus helping you negotiate the best price, it will also bring to light any flaws of the property that the seller is trying to hide. Said hidden flaws may not show up until you have paid for the property and can cost you thousands of pounds in repairs.
- Consider all expenses
When buying a home, many first time buyers only focus on the cost of the property itself and budget towards that alone. In reality, there are other costs associated with buying a home, such as closing costs, appraisal fee, home inspection, mortgage payments, property taxes, renovations, homeowner’s insurance, and so on. All these and other pertinent expenses need to be taken into consideration in your budget.
- Make conservative estimates of available income
When determining cost of the property and other expenses, it is best if you are conservative when figuring out your income and capability to settle all these costs. Calculate your income based on current earnings, not expected income which is uncertain. This gives you a wide margin for error.
- Avoid PMI
Private Mortgage Insurance is something that is best avoided due to its high cost. PMI is insurance for the lender for a circumstance in which you default on the loan and it can mean thousands of pounds over the course of the loan’s term. It is best if you can save and put the 20% down upfront.
With these six tips, you can by your first home and still come out on top financially. Let us know in the comment section any other cost saving tips you may have.