I’m buying my first house, what do I need to know?
It might seem like a steep learning curve, but buying your first home is an exciting time, and with a little help from NM Money – you’ll be unpacking boxes in no time.
One thing is clear when it comes to big life decisions, you need to be comfortable with what you’ll be paying once you’re in your new home; from regular bills to your choice of mortgage – we’ll make sure you know the facts.
Your mortgage
A mortgage is a loan from a bank to purchase a property – you have to pay it back. The bank charges you (interest) for borrowing the money, which is based on the Bank of England’s base rate (the cost to the bank) plus the money they want to make on top.
You can borrow money over different periods, usually 25 years. Mortgage deals have different types and initial rates before you revert to a more expensive rate, called a Standard Variable Rate. That’s why most property owners switch their mortgage when their initial rate ends. You usually have to pay extra fees like arrangement and valuation fees too.
The APRC helps you to compare all mortgage deals to see which are the cheapest in the long run. Fixed rate (set monthly payment) or tracker deals (changing payments) are the most popular.
If you don’t keep up repayments, the lender who lent you the money can sell your house to pay off the debt (their name is on your house deeds or documents until your property is mortgage-free).
How much can I borrow and how much will my mortgage cost?
These are two of the most popular questions, and that’s why we have handy calculators to help you work it all out before you commit.
How much do I need to save for a deposit?
You’ll need to save at least 5% for a deposit on a house, but don’t worry, we have you covered. Yes, we have another handy guide to mortgage deposits.
You’ll be pleased to know that the Government are there to help too; they have a scheme called Help to Buy, which you can quickly learn about.
The Help to Buy scheme can help you with saving for a deposit and help you to buy the property you’re looking for. There is everything from shared ownership and help for Londoners to assistance with new build properties.
What other costs are associated with buying a house?
Good question, it’s an expensive business. You need to consider:
- Saving a deposit of 5% or more.
- Mortgage arrangement fee (charged by the lender for sorting your paperwork out).
- Valuation fee (the lender finds out how much the property is worth).
- Legal fees (this is the cost of a solicitor and surveys to check the house isn’t going to fall down).
- Stamp duty or land transaction tax (this is paid to the Government).
- Removal service.
You’ll also have to consider the bills once you’re settled in your new home, which includes:
- Gas and electricity.
- Council tax, water and TV license.
- Food and personal expenses.
- Building, contents and life insurance.
What is a property survey?
A property survey is a report from a surveyor that tells you and the bank whether there is anything wrong with the house. The bank needs to know what the house would be worth if it becomes necessary to sell it to repay debt; and you need to know that your home isn’t going to fall down or cost you a fortune to fix up.
There are few different types of survey; they range from basic to comprehensive. Click here to read our guide to property surveys.
What insurance do I need?
You’ll need buildings and content insurance and should seriously consider life insurance too. Click here to read our guide to insurance for your home.
Need more advice? Get in touch and we'd be happy to help - our mortgage advice is fee free!