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Buying a home is often described as one of the most stressful events in our lives – and if it’s your first time doing it, it can be a complicated and overwhelming process.
From picking an area to getting a mortgage in principle, then putting in an offer and finally getting the keys, it’s a lot to wrap your head around.
To help, we’ve created a guide on how to navigate each step – with experts giving you some tips and tricks along the way.
So if you’re just beginning the process, or curious about what you need to start, view this guide as your essential companion…
Step one: Set a budget
First things first – you need to work out what you can afford to spend.
You don’t always need a deposit to buy a home – some lenders offer 100% loan to value mortgages – but the more money you borrow, the higher your interest rate is likely to be.
As a general rule, the more you can save for a deposit, the better – you’ll owe less, get a lower interest rate, have cheaper monthly repayments and a better chance of getting accepted by lenders.
Most lenders offer 95% and 90% LTV mortgages for first-time buyers, meaning you need to have a 5% or 10% deposit to put down.
That means if you were buying a £269,000 house (the UK average), you’d need either £13,450 or £26,900 for a deposit.
That rises to £53,800 for a 20% deposit, £80,700 for 30%, and £107,600 for 40%.
There are lots of ways to help you save this money, including using a lifetime ISA – read more about those here.
Lenders typically allow you to borrow between four and five times your income.
If you are buying with a partner, lenders may combine your incomes and use a lower multiplier, or multiply the larger income and add the smaller on top.
Make sure you can comfortably afford your monthly mortgage repayments – a mortgage advisor can help with this (more on that later).
One way to get the gist of how much you can afford to…
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