Buying a house is one of the biggest financial commitments that most of us will make in our lives, so it is perfectly understandable that it can all seem a bit daunting when you are taking this step for the very first time.
Learning how to deal with financial transactions like applying for a loan, is all part of flying the nest and gaining your independence. Finding out how to use short-term borrowing prudently, and you can learn more here at Captain Cash, or applying for a long-term financial commitment in the form of a mortgage, is all part of the process.
Cutting out some costly errors
When you have decided to buy your first home, it is very exciting but challenging, searching around different areas and trying to find the home that meets your budget as well as your needs.
When you are first starting out in the property market, your budget is going to be limited, which often means that you are going to have to make some compromises.
Whilst you won’t have the buying power of someone who has built up some equity and can afford a larger property in smarter area, it is still important to remember that old adage that really matters when it comes to buying property, location, location, location.
Do your research, network with friends and work colleagues, get as many unbiased opinions as possible about the best possible locations where you might be able to buy your first home.
As a general rule, it can often work out to be more financially rewarding to buy a slightly smaller or lesser property in a well-regarded location, rather than try to buy the biggest home you can afford, which is not in a great area for resale values and equity growth.
Prepared for the financial journey
Taking out a mortgage and buying a home is a huge financial commitment, so you need to ensure that you are prepared for what lies ahead.
Affordability is obviously a key issue as you don’t want to take on something that you are going to struggle to afford. Stretching yourself financially to get on the housing ladder is something that goes with the territory as a first-time buyer, but there are limits.
Try to clear your credit card debts, save up a reasonable deposit and understand that as a property owner, you will have extra costs such as maintenance and repair bills, which can come as shock to some, if they are used to their landlord covering those issues.
Do all of your sums
Buying a home is not just about finding the down payment, as there are lots of other costs associated with the transaction.
Make sure you do the math and work out exactly how much you need to make your property-buying dreams a reality. Check out exactly how much you will need for legal fees, insurances, taxes and everything else that can soon add up to a daunting sum of money.
Even if the bank has agreed to lend you the money you need, make sure that your financial position is robust enough to cope with all of the extra costs attached to the process of actually getting the keys to your first home and being able to move in.
Follow the right process
There might be times where you are competing against another buyer on a property that you would really love to call home.
It can be tempting as a first-timer to pull out all of the stops in order to ensure that you don’t miss out, but taking some shortcuts or unnecessary risks in order to get to the front of the line, is not recommended.
What you ideally want, is a scenario where you offer to buy a property subject to a satisfactory home inspection being completed. In a competitive market, it can sometimes happen that you end up competing with someone who has agreed to waive contingencies.
Don’t be tempted to agree to waive contingencies unless you are 100% sure that everything is in order, as following the right process is always the smart way to proceed, even if it means missing out on a property that you have set your heart on.
There are so many aspects of home buying that you need to be aware of, which can be difficult when you are new and unfamiliar to the process, so make sure you ask plenty of questions and take your time reaching a decision, before finally agreeing to buy a house that you can truly call home.
Rosie Hart works as a personal finance consultant who works with many people who are looking to get onto the property ladder but don't quite know if they have enough money saved to do it. She writes about all aspects of personal finance in her articles.