Say goodbye to nagging landlords and parents
Are you a first time buyer? Bank of Scotland shares essential tips.
There are few moments as satisfying in life as the one when you finally move into your first owned home. You can say goodbye to nagging parents, landlords who never answer the phone and flat mates who never wash up. It's your opportunity to take a blank canvas of bricks and mortar and turn it into a home that's perfect for you.
Of course, the financial times are rather uncertain at the moment. But if you are considering taking the plunge into the property market for the first time – mortgages will be at the top of your list. As daunting as this may seem, assuming your personal circumstances are ship shape, taking out a mortgage isn't as complicated as you may think.
Rule number one – Look at all the options. Despite recent changes, there are still a lot of mortgages on the market – and make sure you know what you can afford.
Most mortgages are loans that you pay back over a 25-year period.
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There are two broad types of mortgage –
1. Interest only – where you are only paying back interest to the company you have your mortgage with (this can make repayments cheaper but the amount of actual debt you owe doesn't go down).
2. Repayment mortgage – whereby you pay a small amount of the total debt off each month. At the end of the term you owe nothing to your mortgage company.
There is a lot of jargon in the world of mortgages – do you know what first time – remortgages, tracker and first time – fixed rate mortgages are all about? Don't worry, it's all much more straightforward than it might sound.
If you decide to opt for the interest only mortgage – which could work out with you having lower monthly payments – you will still have to pay the lump sum of the mortgage off at the end of the 25-year period. So a savings account or investment is the wise option – a way of ensuring you have the cash at the end of your mortgage's lifetime. It's an important consideration – as are all the product (sometimes called arrangement) fees and solicitors' costs. You need to consider how you will pay for these when you start looking into your first mortgage.
Next up you need to start looking at properties. There are lots of things to consider: what can you afford, where do you want to live, what areas are right for you logistically, are the local amenities, shops and schools right for you?
The most important consideration is to make sure you only borrow as much as you can afford. Then consider whether you want to buy freehold or leasehold. With a freehold, you own the house outright. With a leasehold, which is the most common situation when you buy a flat, there is the requirement to pay some rent and charges to a landlord. If you buy leasehold make sure that there are sufficient years left on the agreement because otherwise re-selling can become difficult.
Before you do any of this though, you'll need to start saving. Because the days of the 100% mortgage are behind us for the time being, saving as much as you can towards a deposit may be more worthwhile as it will provide you with as much choice as possible when coming to take out a mortgage deal.
Annie is an expert furniture and interior design writer. Her current areas of specialism are
beds,
bathroom cabinets and
posters
