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Can you afford to buy your first property?
First time buyer looking to get on the property ladder? At Johnson Astills we are here to guide you through the legal process of buying a property. The most essential factor to determine if you can buy a property is affordability.
The aim of this article is to breakdown the factor of affordability throughout a property transaction. It is important to know if you can afford the property both in the short term and the long term both if you are a cash buyer or buying with the aid of a mortgage.
Short term factors
There are many short term factors to bear in mind before placing a bid on a property. Firstly, are you able to account for any mortgage fees that may be payable prior to completing the mortgage. If you applied for your mortgage through a mortgage broker, it is ideal to obtain a breakdown of costs required prior to completing the mortgage and confirmation of what is to be charge after the mortgage has completed. Please consider the mortgage rates after completion, there will be a breakdown of the monthly payments of your mortgage in your approved mortgage offer which you will receive from the mortgage provider.
For both cash buyers and buyers purchasing with a mortgage it is also recommended to obtain costs for instructing a solicitor. We at Johnson Astills are more than happy to provide this breakdown up front.
Long term factors
There are also many long term factors to consider when buying your first property. If you are a cash buyer is essential to know that you have 10% available which will be used for the deposit when contracts are exchanged. Along with this, you will need to account for the rest of the purchase price agreed to be available which will be required in between exchange of contracts (making the transaction legally binding) and completion (passing of keys and ownership).
If you are buying with a mortgage you will need usually 10% of the agreed purchase price in cash or savings for the deposit of the property. The amount of your mortgage loan plays a pivotal role in determining how much you will need to pay after the 10% of the purchase price. The remaining funds required need to be in cash or savings. It is essential to determine this from the outset as this will show you if you are able to afford to purchase the property or not.
There may be additional costs to consider if you plan to carry our works to the property once you become the owners including home improvement, extension or structural alteration. This also applies to the purchasing of furniture and home appliances.
If you are a first time buyer and looking to purchase a property our Conveyancing Team at Johnson Astills can assist you and provide you with further information regarding any conveyancing queries. Please contact us at our Leicester Office or Loughborough Office on 0116 2554855 or 01509 610312