Tip 1 – Saving into a Lifetime ISA account
If you’re looking into buying a home and want a financial hand to help put money aside for the deposit and fees, you may want to consider a Lifetime ISA for house purchases. This government-backed savings account is designed to help first-time home buyers get a leg up in the property ladder. It’s best to start saving as early as possible, even if you’re not close to being ready to buy a house. The earlier you start, the more time your money could grow and the more money you’ll have available when you’re ready to purchase your first home. Lifetime ISA rules apply, so ensure you check these out.
Tip 2 – Research on the housing market
You’ll need to research the local housing market to determine a fair price to offer on a home. Look at the number of homes listed, the average number of days houses are lingering on the market before selling and the average sales price of similar homes in the area. You can also speak with the estate agents to get a general idea of the current market in your area.
Tip 3 – Apply for a mortgage in principle
Before you start looking at homes to buy, you should estimate the mortgage payments for each home you’re interested in – there are calculators available online for you to get an initial understanding.
It is likely that you will need to gain a mortgage in principle before estate agents allow you to view houses they have on the market unless you have been financially approved.
Speak to a mortgage adviser to understand how much you could be given.
They will also be able to estimate the principal and interest on your mortgage, and able to help you understand the market and give you access to deals you may not personally have.
Tip 4 – Calculate your debt-to-income ratio
The bank will look at the amount of debt you have compared to your income when you apply for a mortgage. Your debt-to-income ratio is the amount of debt you have compared to your gross monthly income. You’ll have a higher chance of being approved for a mortgage if you have less debt and a higher income.
Tip 5 – Set aside funds for the future
Once you have moved into your new home you may find that you are spending more than usual on items to make it your own, and you may find that you have a cross over of bills from your previous home. So not is it only good to have a rainy day fund for those unexpected costs that may come as being a home owner such as, appliance replacements, fixing the boiler and so on, but to have a bit more extra in those first few months to help you financially whilst you are understanding the amount of council tax and bills your new home is costing.
Saving for a home deposit can be a financial hurdle. It’s important to start saving as early as possible and to diversify your investments to protect against market fluctuations.