For most people, once they’ve finished their education and carved out a decent career path, the next step is to get a mortgage. However, very few people know the basics of mortgages, why they are helpful, why you need one and how to go about getting one, as it is not a process they are likely to be familiar with.
First of all, where it may be tempting to stay renting, with the freedom and flexibility inherent with being a tenant rather than a homeowner, buying a property can have plenty of benefits which make it a good decision to take. First of all, owning your own home finally gives you the ability to create your own living space exactly how you want to. Not having to hold back from painting the walls and putting pictures up is one thing, but once you own your own home you are at liberty to make any changes you want to to make it perfect for you and your family. It allows you to put roots down and settle somewhere you are happy, and become part of a community that you may well be happy in for the rest of your life.
Financially, too, buying makes a lot of sense as although you will still be paying off a monthly amount, just as you would with rent, you are building towards owning the property you live in, rather than paying off someone else’s mortgage. Although mortgage repayment terms tend to be relatively long, usually around 25 years, at the end of this you own your property outright and can then do whatever you wish with it. Even if you just want to remain living there, you have a solid financial asset which can hold you in good stead for the future.
The other financial benefit with buying rather than renting is that often, after the initial payout, your monthly repayments may be less than you would pay in rent for a property of the same size. If you choose a fixed mortgage, or are savvy with switching your mortgage to get the best deal throughout the repayment term, you should always be able to keep your monthly repayments low enough to fit neatly in with your monthly wage, particularly if you have more than one income in your household.
So how do you get a mortgage and go about buying a home in the first place? First of all you need a deposit, as this will help you to work out how much you want to borrow. You can get together a deposit by borrowing it from family or saving up over a period of years. Maybe you have an inheritance you want to do something productive with, whatever way to obtain the money, you will need this large chunk of cash to start out your property buying process,as the mortgage you borrow will generally not cover your deposit. It is possible to get 100% mortgages, but these tend to work out far more expensive in the long run, and larger deposits offer you the best deals through your lender.
Once you have a deposit, work out how much this will be at least 10% of (bearing in mind you will need a little extra for fees, stamp duty and moving) and then put these figures ito a mortgage calculator, before adjusting the amount and repayment term until you have a manageable monthly repayment. If you use a comparison website you will probably then find you have a list of lenders, deals and discounts to choose from and you can compare these until you find the lender you want to go with. The application process is simply filling out all of your details and working with the lender to come up with a deal you can afford, and once you have a mortgage agreed in principle you can start looking at properties – which is the fun part!