How much can you afford
The first thing you need to do is decide how much you can afford. You will need to look at how much money you have available yourself and how much you can borrow.
There are a number of different financial institutions which offer loans to people buying a property, for example, building societies and banks. You should find out if you are able to borrow money and if so, how much.
Some building societies now provide buyers with a certificate that states that a loan will be available provided the property is satisfactory. You may be able to get this certificate before you start looking for a property. Building societies state that this certificate may help you to have your offer accepted by the seller.
Before finally deciding how much to spend on a property, you need to be sure you will have enough money to pay for all the additional costs. These include:-
- survey fees
- valuation fees
- Stamp Duty Land Tax
- land registry fee
- local authority searches
- fees, if any, charged by the mortgage lender or someone who arranges the mortgage, for example, a mortgage broker
- the buyer’s solicitor’s costs
- removal expenses
- any final bills, for example, gas and electricity, from your present home which will have to be paid when you move.
For more information about Stamp Duty Land Tax, go to the GOV.UK website at www.gov.uk and for more information about Stamp Duty Land Tax in Northern Ireland, go to the NI Direct website at www.nidirect.gov.uk.
You should be aware that if you start the process of buying a property and then the sale falls through you may have already paid for a valuation or a survey. If the solicitor has started any legal work you may also have to pay for the work done.
You should also take into account the running expenses of the property you wish to buy. These may include:-
- council tax (in England and Wales)
- water rates (in England and Wales)
- rates (in Northern Ireland)
- ground rent, if the property is leasehold
- service charges, if the property is a leasehold flat
- insurance costs, including life insurance, buildings and contents insurance
- heating bills. An energy performance certificate can help you work out how energy efficient your property is.
You will have to pay a deposit on exchange of contracts a few weeks before the purchase is completed and the money is received from the mortgage lender. The deposit is often 10% of the purchase price of the home but it can vary.