What can you afford when buying your home?

Firstly note that what you can afford is NOT THE SAME as how much you can borrow with a mortgage .

 

To find out how much you can afford you need to work out

 

• The amount you might get from the sale of any current home

• The amount you have saved up which you can use

• The costs of moving in to your home for example

 

The Deposit…

Conveyancing Costs…

Stamp Duty…

The Valuation and Survey Costs…

Mortgage Lender’s Application Fee …

Furnishing, Re decorating etc …

Moving in / Removal

• The costs of running your new home eg home insurance costs and other home running costs
• And don’t forget about your other outgoings (eg your pension etc).

 

Tips on What You Can Afford

The experts say limit repayments to no more than 40 per cent of what you earn.

In other words if you earn £1,000 a month after tax don’t get a mortgage costing more than £400 a month, and so on.

The point is you may be able to get a mortgage which stretches your budget to the limit but leaves you in trouble when you have to pay the other costs involved in buying your home

 

Besides your other outgoings you have to consider the rainy day (for example when interest rates go up and your monthly mortgage repayments might rise steeply…)

 

Related article Possible Solutions Help and Ideas for First time Buyers

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