What can you afford as a first time buyer?

One of life’s most exciting experiences is taking the plunge and getting on to the property ladder. No matter what age you are it is thrilling and terrifying in almost equal measure, but the sense of achievement is incomparable. We have a huge variety of properties for sale in Virginia Water and the surrounding areas, and finding our clients the perfect properties sends a real buzz through the office.

The property industry is filled with jargon and the processes can be complex and sometimes confusing – we aim to make things as simple as possible for our clients, but the complexities of transactions can be quite daunting to an inexperienced property buyer.

Our family business has been selling and letting properties for 150 years with the last 54 years of that being in Virginia Water and the surrounding area and so it’s safe to say we are well-versed in the process. However, this can mean that we are sometimes a little anaesthetised to the cost of transactions and what a shock they can be to the first time buyer.

So what do you need to consider when working out what you can afford as a first time buyer?

A Long Term Commitment

Buying a property with a mortgage is a long term financial commitment. There are no two ways about it; in fact some lenders offer a mortgage product lasting 45 years. Obviously it is unlikely you would stay on the same mortgage for the duration but it is a good example of your commitment.

During the mortgage application process, the lender will check all of your existing assets to make sure that you can afford to repay the amount that you are borrowing. They will confirm your existing savings, salary and expenditure to help them to assess their risk in lending you the money.

A quick Google search will help you to find a mortgage calculator. These are designed to give you a very rough guide as to what you might be able to borrow from a bank. They have a certain amount of use when it comes to finding out what you can afford but they are by no means gospel and should be used as a guideline only. When you come to speak to a lender or mortgage broker they will be able to give you much more accurate figures.

You should always make sure you speak to a qualified mortgage specialist to find the best mortgage product for you; they will consider your specific circumstances and find the best products.

The Main Costs

If you are buying a property with a mortgage your lender will usually require at least a 5% deposit. This is 5% of the total value of the property you wish to purchase. Most people will have been saving for a period of time in order to generate this deposit; the larger the deposit, the more manageable your monthly payments.

We have also seen growing input from the bank of mum and dad. If you are accepting a gift from your parents to help with your deposit, you will need to declare it to your lender.

If you are purchasing a property in the England, Wales or Northern you will need to be fully aware of how much Stamp Duty you will need to pay. Along with the purchase of the property itself, Stamp Duty is one of the biggest bills you will receive – make sure you are aware of the sum and budget accordingly.

Stamp Duty was scrapped for most first time buyers in November 2017, but there are a number of criteria which need to be met in order to qualify for exemption. You can find more information about this on the Money Advice Service website.

Miscellaneous Costs

It is important to remember that there are a number of additional costs which sit alongside the purchase of a property. Costs such: as solicitor’s fees, property surveys, land searches and mortgage arrangement fees all add up.

Most lenders will also require you to purchase buildings insurance to cover the building itself, as well as life insurance and income protection to safeguard their investment. These policies also benefit you so it’s not all one way!

While many of these costs seem nominal compared to the deposit and mortgage payments, they quickly add up so it is important not to overstretch your budgets.

Get in Touch

If you are looking to move house, make sure you take a look at our amazing properties for sale in Virginia Water and the surrounding areas. If you’d like to speak to someone about your property options, a member of our expert team would be happy to help. You can call us on 01344 843000 or email us. You can also follow us on Facebook, Twitter, Instagram and LinkedIn.

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