5 Things to Know if You’re Buying Your First Home in 2022
Congratulations if you plan to buy your first home in 2022! It’s a major step forward, and it’s exhilarating, if not a little scary. You’ve probably been considering buying a home and saving a deposit for some time.
As you get closer to your objective, there are several things you can do to prepare for the day you submit an offer that can make the process go more smoothly. You should start thinking about these five stages immediately, whether you plan to move in shortly or at the end of 2022.
Start looking at the real estate market right now:
Start looking at what’s available in the location you wish to move to if you haven’t already. Are there any properties available that meet your requirements? What is the typical cost of a home in the neighbourhood?
There are numerous factors to consider before purchasing a home. Having a clear notion of what you’re looking for might make it easier when it’s time to start booking viewings, whether it’s for your commute to work or whether you want to take on a project.
It can also assist you in setting realistic goals while keeping your budget in mind. Once you have narrowed down on a property, it is always wise to book a property valuation to know if you are paying a fair price and it also helps in securing a mortgage,
Make the most of your deposit:
You may already have a Lifetime ISA (LISA) account where you’ve been saving your money. If you do, increasing your savings in the coming months can help you enhance your deposit. It’s not too late to get a LISA if you don’t already have one. A LISA is a smart method to put money aside for your first house.
You can put up to £4,000 into a LISA each tax year, which can benefit from interest or investment returns. Additionally, you will receive a 25% government incentive on top of your deposit. You can deposit the maximum amount for the 2021/22 tax year and an additional £4,000 when the 2022/23 tax year begins on April 6, 2022 if you register a LISA today. Your deposit will be boosted by £2,000 as a result of this.
Keep in mind that if you take money out of your LISA for anything other than buying your first house before the age of 65, you’ll be penalized. As a result, you should only deposit funds that you intend to utilize to purchase a home or that you intend to save for the long term.
You must be over the age of 18 but under the age of 40 to open a LISA account. While new applications for Help-to-Buy ISAs are no longer being accepted, if you already have one, it’s worth contributing as much as you can to gain a 25% government bonus on your deposits.
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Go through your credit report:
Your credit report will be used by mortgage lenders to determine how much you may borrow and whether or not to approve your application. You may get a free copy of your credit report and analyse it without affecting your credit score. TransUnion, Equifax, and Experian are the three major credit reference companies. Take some time to read over the report and ask the supplier to correct any errors you uncover.
You may also be able to increase your score by taking simple activities such as registering to vote. By reviewing your credit report ahead of time, you may be able to address any red flags that might turn a lender off. If you have a high credit utilization rate, for example, lowering your debt could improve your chances of getting your application approved.
Being aware of red flags can help, since you may be able to explain them in a comment on your application. It can take a few months for changes to your credit record and score to appear. As a result, performing this step prior to filing a mortgage application makes sense.
Make an application for a mortgage in principle:
A mortgage in principle, also known as a “agreement in principle,” might help you figure out how much money you can borrow to purchase a property. It won’t do a hard credit check when you apply for a mortgage in principle, and it’s not a guarantee, but it’s still important.
If you accept it, it will inform you how much you can borrow and what interest rate you might be offered. This might assist you in determining how a mortgage will fit into your financial plan. When you book a viewing or make an offer, certain estate agents may ask to see a mortgage in principle. It aids in establishing your credibility as a buyer. A three-month mortgage in principle is typical.
Make a budget for additional expenses:
The deposit is sometimes the largest expense for first-time purchasers. Saving the money you need can take years, but don’t forget about the other expenditures of homeownership. Include conveyancing, surveys, searches, mortgage application fees, and, if applicable, Stamp Duty expenditures in your budget.
You may also need to hire a moving company or purchase furniture for your new home. If you don’t account for these, you may find yourself with unexpected costs, putting a strain on your budget and slowing down the home-buying process.
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