Bola Anike, a UK based Award Winning Mortgage Broker, writes for African Voice on the tools to grow financially.
Buying your first home can be terrifying but can also be a significant financial and personal milestone and one that can bring you a lot of joy once achieved. Here’s a step-by-step guide to help you achieve this:
Assess Your Financial Situation
Credit Score: Check and improve your credit score if necessary. A higher credit score can help you secure a mortgage with better terms.
- Savings: Start saving for the deposit. The higher your deposit the better the terms from the lender. Additionally, you’ll need to save for the legal, moving and application fee. Typically, you’ll need to save at least 5-20% of the property’s purchase price.
- Debt Management: Pay down existing debts especially the high interest ones o lower your debt-to-income ratio, which will make you more attractive to lenders.
Understand What You Can Afford
- Budgeting: Use a mortgage affordability calculator to determine how much you can afford based on your income, expenses, and savings.
- Pre-Approval: Get pre-approved for a mortgage to know exactly how much a lender is willing to offer. This also shows sellers that you’re a serious buyer. Talk to a Mortgage Broker.
Research First-Time Buyer schemes available in your area
Government Schemes: Look into government programmes that help first-time buyers, such as Help to Buy, shared ownership, Right to Buy (in the UK) or similar programmes in your country.
Determine Your Priorities
Location: Decide where you want to buy. Consider factors like proximity to work, public transportation, schools, and amenities.
Property Type: Consider whether you want a house or a flat. Each has different costs, maintenance requirements, and potential for appreciation.
Long-Term Goals: Think about your future plans. Are you buying a starter home with the intention of upgrading later or are you looking for your forever home.
You need to be realistic.
Be realistic: There is nothing wrong in starting small and scaling up later. You might not get everything you want in your first home. Focus on finding a property that meets your essential needs and is within your budget.Your first home doesn’t have to be your dream home. It’s more important to get on the property ladder and build equity. You should consider alternative locations If your desired area is too expensive, consider nearby neighbourhoods or towns that are more affordable
Make an offer: Once you find a property you like, make an offer based on the market value, the condition of the property, and how long it’s been on the market. Do your due diligence on the property, get a surveyor to inspect the property for any potential issues and use the findings to negotiate repairs or price reductions if necessary. There’s always room for this based on the findings.
Secure Your Mortgage: This is where a good mortgage broker comes in, to help you get the right mortgage product for you. Your broker will help you work with the lender to finalize your mortgage. You’ll need to provide documentation of your income, assets, and debts.
Sign and Get the Keys: Once everything is in order, sign the necessary documents with your solicitors, pay your deposit and closing costs, and receive the keys to your new home.
Move In and Manage Your New Home
Budget for Homeownership: Be aware of ongoing costs such as property taxes, insurance, utilities, and maintenance.
Stay Informed: Even after you have moved into your first home, it is important to stay informed and keep an eye on the property market and interest rates to make informed decisions.
By following these steps, you can successfully navigate the process of buying your first property and get on the property ladder.
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