Buying a home is likely to be the biggest purchase you'll ever make. To find the best deal for you, you'll need to choose a mortgage from the hundreds that are out there. If you know what you want to find, this will be a lot easier.
How are you doing?
Depending on your age, income, and financial situation, the things you need from your mortgage will be different. Take the time to think about what you need, whether it's flexibility, low rates, or security. Think about where you are now and where you want to be in the long run.
In It For The Long Haul!
Most mortgages have a 25-year term, so you could be locked into an agreement for a big chunk of your life. This means you should have at least a general idea of how your finances are likely to change over time. No one can predict the future, but good planning is one way to help make sure you can handle the challenges that lie ahead.
Get ready to do the budget
The first step is to make a budget. You need to know how much money you get each month and how much you spend. Be honest. There's no point in making up your income or ignoring some of your costs. You want to buy your own home, but you also want to be able to eat once you move in! Think about all your bills, council tax, and loan payments, as well as things like food, gas for your car, clothes, going out, and going to the movies. Check your bank statements to make sure you've put down all your regular costs.
Time for a crystal ball..
Next, think about where you're going. Now, we don't mean for you to go to a quack and ask what will happen in your life in the future. That would be silly. But you would have to be honest with yourself when answering some personal questions in order to plan ahead financially.
Do you think your income will go up or stay the same over the next few years? Do you have people who depend on you, or do you want to start a family? Even though there are some unknowns, you should be able to tell if your needs will stay the same over the next five years or if they will change a lot.
Your budget should give you a good idea of how much you can pay each month in mortgage payments. Keep in mind that buying a home will also cost you other things, like legal fees and stamp duty.
Most of the time, a mortgage lender will also want a cash down payment, which is usually 5 to 10 percent of the total cost of your home. The money you borrowed will then be paid back to you in monthly instalments. Keep reading to learn more about how mortgages work.
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