One of the best things I spent my money on last year was a house. Six months later and I still have a lot of painting to do, but it’s a dream come true to have my own space. Since then, I’ve loved every minute of owning a house. And I know that eventually, I’ll sell it for a profit. Maybe becoming a homeowner was one of your big goals for this year, and you’re wondering how to afford to buy a house, put a plan in place to make shit happen and get that down payment ready.
I’m here to tell you that it’s possible! I’ve been there, done that, and it’s easier than you think if you get your finances in order first.
Step 1: How much do you need to borrow?
The best way to know not only if you can afford a place, but what you can afford, is to go through what you earn vs what you spend. A mortgage advisor or similar professional will look through this anyway, and tell you whether or not you’re ready to buy. Being told you aren’t ready is not a bad thing because you’ll know how to get there.
I’d advise to check out an online calculator, you can usually put in your earnings before tax, estimated monthly spendings, and earnings after tax and it’ll give you a fairly accurate example of what you could borrow towards a payment of your house. It’ll give you a fairly realistic view of your price range and the houses you can look into.
Step 2: How much can you actually save?
Check your credit score and make sure you’ve taken (or are taking) the necessary steps to improve your credit. Lenders take this into consideration when they calculate your mortgage, so it’s really important that you’re doing everything you can on your end. You’ll also need to make a downpayment. If you’re a first-time buyer there are schemes that reduce this payment, but you will still need to be able to save up 5-10% of the value of the house you want to buy, or have someone to gift you this money.
The higher the deposit you save, the lower your monthly mortgage payments will be. I always start my savings with an app like Daily Budget, which tells me not only how much I need to save to meet my goal but how much I have to live on for the rest of the month.
Step 3: Add up the small stuff
Also take into consideration the little fees you don’t think about, such as having a surveyor or investigator look into the property and address any concerns, any land tax or duties you have to pay, and a solicitor or realtor’s fee. It’s important to write it all down so there are no surprises.
Once you buy the house you’ll have all sorts of outgoings, life insurance, home insurance, bills, tax, it all comes flying out. So save for a buffer too, and do your research – get the best deals on everything up front and you’ll be in a better position in the long run! With your finances in order, make an appointment and get pre-approved for a mortgage. Don’t forget to research the best mortgage for you, and try to get a fixed interest rate for as long as you can.
Step 4: The fun begins
Look around, add properties across all different networks to your wish list. Exactly a year ago today I stood in the rain after viewing three properties I hated and wondered if I’d ever find the one. It happened by 22nd February 2017, so fairly quickly. Once you’ve had a little glance at the mortgage calculator you should know the sort of price range you can look for in a property. We looked for properties above our price range by a few thousand and then haggled it down a bit.
This is the fun part, you can view houses way out of your price range just to get a sense of what’s around. I would recommend seeing a lot of houses in one area, so you know what the different streets have to offer and how the prices differ.
Step 5: Be strategic with your house viewings
When you’re looking, don’t fall in love with the way the homeowners have the house – try to see beyond it. Look for a house with good bones that you can improve on. Our house needs a lot of improvements and I expect it to take a while until I’m happy with it, but we want to sell it off and make a profit so we’re willing to put in the work. It’s important to think long-term, so don’t worry too much about light covers and paint.
Another thing I’d say is to check the crime map in the area you’re buying, and see how much similar properties sell for. You’ll know then what a realistic offer is and what you can expect if you want to flip it for a profit. I’d also say to look for a house that’s the right size, so choose a house that would suit you 5-10 years from now in case anything happens.
Tell me about your home buying journey in the comments below…
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