How Much Can I Borrow
How Much Can I Borrow: Mortgages For First Time Buyers
Although getting a mortgage may seem exciting at the beginning for a first time buyer, it's not an easy process especially if you are seeking a loan with bad credit. You don't just have to find a good deal, you also need your offer to be accepted. There are some things that you can do to help improve your chances - and they could help you to get the home loan that's right for you.
How much can you borrow?
Before you begin to search for houses, you should first give yourself an idea of how much money you can borrow. The reason that you should do this before anything else is because you could find your perfect property, only to realise that you're unable to afford its cost.
Also, many banks and lenders will want to know how much you make and how much you spend - and they'll be likely to want proof of this.
But it's not all about how much you earn and pay. Your credit score is important, too. If you've had any trouble with debts in the past, then the lender may not accept your offer.
Saving up for a deposit
You'll also need to save up money for a deposit before you apply for a home loan.
Most banks and lenders will lend you 95% of the property's value, so you will have to pay the other 5% up front. However, you'll have a wider choice if you put down a 10% deposit, but the best rates available are reserved for borrowers who can offer a larger amount - which could be as much as 40%!
So, you should make sure to save as much money as you can for a deposit and remember that in most cases, you'll need at least 5% for it.
The fees of a mortgage
You should also remember that there are other fees that come with obtaining a mortgage. Many lenders will charge an arrangement fee for your mortgage and this amount could be £1000 or more. Also, don't forget that if you're using a mortgage broker, then you may have to pay them a fee, too.
And that's not all of the extra cash that you'll need to pay out either, as there are other fees which come with owning a home, too. There's the fee a survey and for the conveyance of the property, the cost of furnishing and decorating your home and more.
Getting a rough idea of how much you'll need to spend on these extra costs can help you to avoid having an empty home, or even debt to the lender if you spend your money on the extra fees!