What can you afford as a first time buyer?

12th July 2019

What can you afford as a first time buyer?

Searching for and purchasing your first property is one of the most exciting things you can do. Sure, it’s stressful and terrifying, but once you’re on that ladder the sense of achievement makes it all worthwhile.

There are many things that you’ll need to get your head around – while we try to explain everything clearly there is a lot of jargon associated with property and that can often be quite daunting. The biggest surprise people experience is the sheer cost of the whole process.

As the leading estate agent in Beaconsfield and the surrounding areas we are a little desensitised to the magnitude of the figures which are associated with property transactions – especially in our area.

Long Term

The question you need to ask yourself as a first time buyer is, “what can I afford”? This is a long term commitment with some mortgage lenders offering up to 45 year terms, so you need to plan for your future. Obviously, you might not stick with the same mortgage product for the full term but it’s a good illustration of the longevity of the commitment.

When applying for a mortgage, the lender will look at your savings as well as your income in order to assess the risk associated with lending you a large sum of money, and the final amount will depend on those existing circumstances.

There are a number of mortgage calculators available to give you a rough guide to the kind of figures you need to be looking at when budgeting for your first home. Remember these calculators are there simply as a guideline, when you come to speak to a lender or mortgage broker they will be able to give you much more accurate figures.

Always make sure you speak to a mortgage specialist to find the best mortgage product for you, they will take your specific circumstances and find the best products.

Budgeting

Lenders usually require at least a 5% deposit. This means 5% of the value of the property you are looking to purchase. This is where your saving prowess can really affect your borrowing power. The more you put down as a deposit, the better your mortgage deal. One of the key factors in getting on to the property ladder is the ability to save a large sum of money. A large deposit can take the pressure off of your monthly expenditure on mortgage payments.

If you are purchasing a property in England, Wales or Northern Ireland make sure you check what Stamp Duty you will need to pay. Aside from the purchase of the property itself this could be one of the biggest bills you receive. Stamp Duty was scrapped for most first-time buyers in November 2017, but there are certain criteria which will need to be met in order to qualify for exemption. You can find more information about this on the Money Advice Service website.

Miscellaneous Costs

It’s not just the big number on the value of the property that you need to concern yourself with and Stamp Duty can be quite expensive and a bridge too far for those who are stretching their affordability.

While those costs dominate the headlines you’ll find that it is the plethora of other costs which really add up and can be a bit of a shock. Costs such as solicitor’s conveyancing fees, property surveys, land searches and mortgage arrangement fees, you might have to pay your mortgage broker a fee. Lenders will also require you to purchase buildings insurance to cover the building itself, and possibly life insurance and income protection to safeguard their risk.

Remember none of these costs will actually get you moved in so make sure that you are aware of what it will cost to get into the property once you have your keys. While a lot of these costs may seem nominal compared to the deposit and mortgage payments they quickly add up so it is important not to overstretch yourself and set your budgets sensibly.

Get in Touch

If you are a first time buyer and would like to speak to a member of our team about your property options give us a call on 01494 680018 or email us. You can also find properties for sale in Beaconsfield on our website and follow us on Facebook, Twitter, Instagram and LinkedIn for all the latest updates.