A guide for home buyers
What kind of lifestyle is important to you?
Where are your friends and family based?
What’s the main reason you’re looking to
buy and what can you compromise on?
Whether you’re upsizing to accommodate a growing
family, you want to live in a livelier part of town or
you’re investing in a buy-to-let property – these are
some of the bigger questions to consider before you
even think about bricks and mortar
Once you’ve established your buying priorities, the
search begins. This guide will see you through the
process from start to finish, covering the tasks on this
checklist
• Research good local agents in your chosen area and pop in to their
offices for a chat about your needs and lifestyle.
• Sit down with a mortgage broker and find out what you can afford to
borrow.
• Explore the properties your agent recommends to you and make
an offer on the one that meets all the criteria you aren’t willing to
compromise on. Once agreed, instruct solicitors and give all the
details to your mortgage broker.
• Instruct a surveyor to carry out a survey on the property and agree
on dates for exchange of contracts and completion.
• Once your solicitor is ready to exchange, arrange buildings and
contents insurance to start from the exchange date.
• Let your utility companies know of your moving date.
• Complete and send your new address to your friends
and family
Mortgages
Finding the right mortgage will get your
purchase off to a great start.
There are two options available to you:
1. Employ an impartial mortgage adviser who’ll search
the mortgage market to find the best deal for you.
2. Find your own mortgage by scouring the market for the best
products around – price-comparison websites have now made
this task much easier.
Repayment mortgage or interest only?
1. With a repayment mortgage you repay the capital and interest
together in fixed instalments typically over a 25 year term.
2. Interest-only mortgages require you to service only the interest
on the mortgage every month and don’t reduce the outstanding
capital balance over the term. Most mortgage lenders expect
you to have in place a suitable repayment vehicle to provide
you with sufficient capital to allow you to repay the outstanding
debt at the end of the term. These are considered to be niche
products and only suitable for certain clients, generally with
larger deposits
Interest-rate terms
You’ll need to decide what kind of interest rate you want with your mortgage.
There are a few to choose from:
Fixed-rate:
With a fixed-rate mortgage,
the interest stays the same so you have
the security of knowing exactly how much
you’ll pay every month for a fixed number
of years. So, even if interest rates go up,
your repayments won’t
Offset:
You can offset your savings and
potentially money in your savings account
against your outstanding mortgage
balance. This will ensure you reduce the
amount of interest you pay. You won’t
earn any interest on funds in your current
and savings accounts for the length of the
agreement but with the current low savings
rates on offer, the hope is you will still make
savings
Tracker-rate:
These are based on a margin
over the Bank of England base interest
rate. They’re variable and will change in
line with Bank of England rate movements
and as such can go up as well as down.
Some lenders base their trackers off their
bank base rate so it’s important to note
whose base rate the product tracks.
Standard variable rate:
Once most of the
mortgages mentioned above finish, they’ll
typically switch to a standard variable rate
and this means mortgage repayments will
probably increase by a significant margin.
If possible it is generally worth avoiding
going onto this rate.
Discounted-rate:
The lender provides
borrowers with a discount from their
standard variable rate, typically for two
years. These mortgage rates are more risky
than fixed or tracker rates as the bank or
building society can increase the amount
you pay at any tim
Capped-rate:
A capped-rate mortgage
means you won’t pay above an agreed rate
for a fixed number of years. If the base rate
falls, the interest rate on your mortgage
will also fall. There aren’t many of these
deals available at the moment.
Before you enter any mortgage agreement, check important details such as charges for repaying the mortgage early or making any overpayments. Make sure you know how long the mortgage offer lasts for and tries to Make overpayments on time if possible. Late repayments may cause problems Securing new credit It will also be advisable to consult a knowledgeable mortgage banker who is familiar with all the home lending programs and can advise you on the best one that fits your needs.
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