Buying your first home is a right of passage that many of us work hard towards. Some of us are fortunate to achieve it early in our careers, and for some it takes longer and can be a real struggle to get to. I bought my first flat early in my 20s and moved again three years ago to a house further out of London (hence why I could afford a bigger property). I know that I am in a very fortunate position to have been able to do this, and in this post I am going to help you work out whether you can afford to buy a home, and also, what I’ve learnt from being a home owner in the last 15 years.
Create a budget
The first thing you need to do is to create a budget. Whilst it is important to work out what you are able to afford and save right now, it is also key to remember expenses which you may not be incurring if you are renting or still living with your parents. In my first home, I was shocked by the price of Council Tax and the service charge and ground rent that I had to pay! I’ll be totally honest, I hadn’t budgeted for them, and it meant things were a struggle for a while until I started earning more money.
The budget should cover your situation now (so what you can afford to spend each month) as well as what you can save. You will need to include any other expenses in your budget which you may incur from the move, such as removal companies or legal fees. If you need to spend money on the new property, for decorating, renovations as well as furnishing it, you need to include that too. Do you research, get quotes, but then always add on a minimum 10% contingency.
If you are not sure how to go about creating a budget, check out Money Saving Expert’s post all about budgeting which includes some great free downloadable templates to help you get started.
Use a calculator tool
Whilst you will probably want to meet with a mortgage broker who can help you and give you advice, a great place to start is using a free calculator tool. You can put in numbers from your own budget and it will help you to calculate what you can afford to borrow.
Prepare your documents
Once you have done your budget, worked out what you can afford, and are ready to start making applications for mortgages and putting offers in on properties, you will need to prepare your documents. Speak to your real estate agent or estate agent, and your mortgage broker or bank. They will advise you what is needed for each step. Your solicitor (in the UK) will be able to talk you through the process too. Documents that you may need include proof of ID (such as a passport), proof of income (several lenders may require 6 months pay slips, and you will need to evidence your income for a longer period if you are self employed), proof of deposit and proof of address.
Top tips for buying your first home
I loved my flat which was my home for 12 years, but I learnt a lot whilst living there. Here are the top things you should consider if you are looking at buying a property:
- Avoid leasehold property – this may not be possible for everyone, but I would never buy leasehold again. If you are going to buy a leasehold property, do your research into the freeholders and the property management agents. I had the worst and they were awful. They bullied and cheated the residents a lot. Also check the length and terms of the lease before making a purchase.
- Don’t stretch yourself too far – thinking you can stretch your budget when you have no guaranteed way of making the extra money will only set you up for failure and struggles.
- Don’t be led by your heart – make sure you follow your head too. You might see a property which you fall for, but if it doesn’t tick all the boxes on paper then you won’t be truly happy there.
