First- time buyers? The article would help you surely
Quite excited about the new budget declarations and relaxations about bank loans and mortgage? Want to buy the dream house in the coming financial year? It’s a great thought indeed. However, you have to be quite skeptical and cautious if you are a “first-time buyer”. The pathway of owning property has several pitfalls and potholes.
Does it mean, you should drop the idea of buying a residential or commercial property? Not at all! Rather, you should proceed with the thorough knowledge of it. A sensible approach makes the first step pretty easy and simple. You should consult an expert property dealer who explains the salient points of it. The article talks about important concepts that should be known to every potential buyer.
Do I get help from some source?
Yes, it is possible to get help for the purchase and mortgage process. In fact, there are several schemes for the first-time buyers only. A mortgage broker would tell you about the available options. The protection advisors in the team explain the choices of products. They also give information about lenders.
Remember; you will have to satisfy the prospective lender about the repayment capacity. When there is no ambiguity about is, there is no difficulty in getting the loan sanctioned. You should ask the help from a mortgage broker who is proficient in putting forward the case properly.
Align finances well
Since you are the first-time buyer, it is very important that the finances are in order. Make sure that you don’t have any outstanding loans. Sometimes, it becomes a hurdle in getting the loan sanctioned. Since the credit rating takes several things into consideration, including outstanding loans, you should go with a clean chit.
Look at your expenses and try to cut corners wherever is possible. You will need improved financial planning and money management. Income and expense statement becomes one of the effective documents to get the loans sanctioned. It is better if you have some fixed deposits. They improve credit scores. If you have parental assistance, then it is a positive aspect. According to the rules, parents can take the partial risk of the mortgage. They can also offer their home as collateral. It boosts the credit rating considerably.
All these things need your time and efforts. Therefore, start the financial planning and preparation three months beforethe purchase.
Beware of the costs
There are several types of costs involved in the buying process. You have to be clear about each and every thing. Some of the costs are included in the cost of purchase but some are over and above it. Financial experts say that the more money you keep aside as the deposit, the chances of getting a better deal. Here are the major costs involved in the cost:
- Mortgage Brokerage Fee: When you assign the task to a mortgage broker, she or he charge fees for rendering the services. There may be a separate fee for a financial advisor. Sometimes, it is inclusive in the fee of the broker.
- Mortgage arrangement fee: It is the additional charge for the interest amount of the mortgage amount borrowed by you. You should get clarity of it because it is not charged in some cases.
- Solicitor fee: It is not possible to close the deal unless you seek the help of a registered property solicitor. There are several legal and administrative tasks involved in the deal. They can’t be accomplished without the help of experts. Some solicitors charge fees only if the deal gets through. If the transaction doesn’t happen because of any reason, you will not be charged with the legal charges. Some people charge a fixed fee, some charge on the hourly basis, and some take the percentage of the deal amount. You should be clear about it upfront. It is a good practice to seek quotations for two or three solicitors so that you can pick the cheapest.
- Document search: It is one of the critical most things that can make or break the deal. You will require information about the future development plans or preservation order from the local authorities. These things may affect the property costing. Environmental reports, pollution clearance, and water and drainage connection reports are to name a few. Though the charges aren’t exorbitantly high, you should keep provision for it.
- Valuation and survey charges: Lenders will appoint a surveyor who will look into each and every aspect of the property. A registered chartered surveyor performs the task, and he or she charges a considerable fee. The survey report talks about the condition of the property, safety and hygiene issues, and structural report.
- Stamp Duty: Since the stamp duty can be 2 percent to 12 percent based on the cost of purchase, you should keep sizable money aside. The recent amendments made stamp duty also slab wise, just like the income tax slabs. Also, there is a surcharge of 3 percent on the purchase of the second home.
- Moving costs: When you hire a moving agency for relocation, there is a cost involved in it. You may save it by doing the relocation personally. However, it is a cumbersome work. Thus, experts suggest that one must put some money aside for relocation or movement cost.
- Building Insurance: You need home insurance for the structure of the home and also the belongings. These insurance policies offer comprehensive coverage against natural calamities, theft, and other threats. However, you should read the policy document carefully before signing the document. Make sure it covers all possible risks. If the policy doesn’t suffice your needs, then you will have to buy riders. You need to keep money spare for the premium amount.
- Miscellaneous costs: You may want to paint the house before moving in or need some amendments to suit your requirements. Keep some money for it.
These are some costs that you should know beforehand. When you move ahead with an intention of buying a property, this information will help a lot.