When first thinking about getting on the property ladder, it’s easy to think you’re almost there once you’ve saved a deposit. This isn’t always the case, however. Read on for criteria to see if you’re ready to buy a house!
The Frugal Frenchie
Unfortunately, in the UK, it is quite common for people to have student debt. One might have other debt too, which are more detrimental to themselves in terms of buying a house.
Do you have a high amount of the following?
- Maintenance loans
- Credit card debts
- Auto loans
- Personal loans
- Store credit card repayments
If you are struggling to pay off your monthly repayments, then it is important to consider how adding monthly mortgage repayments, even if it’s only paying the interest off, would affect you.
Credit report/credit score
Just for clarification: your credit score is calculated based on the information of your credit report. Like in education, you want as high a score as possible as this shows you have better credit history.
A credit report shows different credit scores, but mortgage lenders often use FICO scores. This is a particular brand of credit score which is used to predict how likely you are to pay back a loan on time. If you have high scores, you may be eligible to lower interest rates. Mortgage lenders will calculate this by taking the average score from several credit reporting agencies.
There are different ways to better your credit score so if yours is low (you can check for free on sites such as ClearScore) it’s worth looking into before applying for mortgages.
Asides from the deposit, there are other costs that you need to take into consideration before you can move into your dream home. It can take an additional chunk out of your wallet, so make sure you have accounted for these too.
- Stamp duty
- Valuation fee
- Legal/solicitor fees
- Estate agent’s fees
- Electronic transfer fee
- Removal costs (unless you have transport yourself or friends who owe you a favour)
- Mortgage costs: booking fee, arrangement fee, mortgage valuation fee
- Leaseholders’ cost (only applicable if buying a leasehold property)
If you do have enough saved up for all the above, remember that once your house is bought, it doesn’t end there. Helpfully, there are a lot of mortgage calculators or “running cost” calculators on property sites like Rightmove and Zoopla.
On top of mortgage repayments (or rent if you are looking to have shared ownership), you need to remember that there are other payments you’ll have to keep on top of in order to keep your house running:
- Council tax (varies considerably depending on your area)
- Any maintenance or repairs that needs doing
- Any new furniture etc.
Buying a house takes time. It can be a long process, waiting for the sellers to move out, waiting for solicitors, the time it takes to move in etc. It’s not a decision that you can make on an impulse.
Be patient, be prepared and get ready to enjoy that home once you move in! Anything you’d like to add to others reading, please leave so in the comments below.