| Calculate Your Price Range
You need to know:
The money you will make from selling your current home
The money you can borrow (The Amount You Need to Borrow)
- Investments and savings you can use
- Any other additional costs involved in buying and moving (see Additional Cost)
- Subtract sum (4) from the grand total sum of 1, 2 and 3. Then you will have an estimate of the price range you are looking at.
The Amount You Need to Borrow
Before you even begin looking at houses, ask at properties your mortgage lender or mortgage broker what the maximum potential loan can be. This will be based on the size of your deposit and how much you earn.
All home buyers are required to place a deposit on a property as any mortgage company will very rarely fork out the entire property price. It is sensible to try to put down a minimum of 5%, and more if possible.
The smaller the financial deposit, the more the lender charges for that extra risk. The majority of mortgage lenders charge a 'mortgage indemnity guarantee fee' (MIG), a fee for lending a higher percentage of the value, on bigger loans. If you do not have enough money for the deposit, for example if your house is not sold yet, it is possible to get a 'bridging loan' from your bank, which will be repayable on the sale of your house.
Lenders normally lend up to three times the amount of your annual income; some will even lend four times your income. If you buying as a couple, this amount goes up to either three times the first income plus a year of the second income, or 2 1/2 times your joint income.
Arrangement Fee
This is a fee lenders charge to cover setting up the mortgage. Certain lenders waive the fee.
More >>>
|
