House Budgeting Tips During the Buying Process

28 December

Speak to a mortgage advisor early on

Even if you’ve just begun considering getting a mortgage in the future, it’s really important to speak with a mortgage advisor as early as you can. This guarantees you’re up-to-speed with what is and isn’t required, and how affordable certain aspects of the buying process will be.

So, how can chatting with a mortgage advisor help?

Discover how much you can afford and what home prices will suit your budget.
Find your credit rating and information around it; this is crucial if you’re a first-time buyer purchasing a home for the first time.
Moving to a new property in the current economic climate doesn’t necessarily mean mortgage rates will be affected, but if rates are changing, a mortgage advisor is there to help guide you through increases and decreases.

Establish your budget

Gauging how much budget you need, and what for, will keep you afloat throughout the buying process, as you won’t worry as much if you face hidden financial surprises along the way that you haven’t accounted for. This could relate to home survey repairs that you need to pay towards, for example.

Saving is key when you’re hoping to buy a home, and it’s surprising how a little goes a long way. Plus, it’s a great feeling knowing you’ve been carefully contributing to your overall budget.

Set savings goals for your home deposit

When looking to buy a home, like a lot of expensive purchases, it can’t be bought without putting down a deposit first. A house deposit is typically a large amount of money, which will contribute to how much you pay for your mortgage overall, as well as what timescale you’ll be paying it off in full.

So, setting money aside each month, or setting up an automatic bank transfer to your savings account, will help you in the long run. If you’re hoping to save a set amount for a house deposit, to budget for this realistically you’ll need to work out much you need to set aside. This needs to be in a timescale that’s viable and achievable, so you can start your savings journey successfully.

Just work out how much deposit you’re going to need and set yourself this goal with these key things in mind:

How much money will I need in total?
How much money can I put into savings while still living comfortably?
How often do I need to save this amount to reach the total figure?

Since phones are part of our everyday lives now, it would be a good idea to list this data/these goals in the notes section on your phone. Alternatively, you could explore one of the many free apps available on mobile to help you keep track of your home savings pot.

Having an easily accessible total of your budget means that when you’re thinking about ordering a takeaway, for example, you might refrain and save your money instead. Because if you visit your notes to check your budget for the month, you might realise you need to save more. This is beneficial, as you’re naturally becoming more aware of your spending, which brings great financial results for you later on.

Talking with your mortgage advisor will have a huge impact on this process, too, as they’ll be able to help you conduct a realistic savings goal, by looking at your overall finances.

Account for furniture in your savings

Unlike renting, when you purchase a new build home it typically comes unfurnished. This means you need to financially forecast the cost of furnishing your home. Consider what appliances and furniture pieces are going to cost you the most by Googling the prices of each and set money aside for the total amount you’ve roughly estimated.

Budget for legal bills

The legal aspects of everything house related are often dismissed when people look at climbing the property ladder. Although, these costs are ones you need to consider early on. These include solicitors fees and the likes of ownership transfers (when the solicitor/conveyancer officially sends the deposit amount of a home to the owner to make it your property).

Assess and improve your credit rating

The earlier you review your credit rating before buying a home, the more time you have to improve it. So, we’d certainly recommend speaking with your mortgage advisor about your credit rating and taking steps to gain a higher credit score.

This could be by:

Officially changing your postal voting address to the one you’re currently living in, after forgetting to adjust it previously.
Paying off credit cards with outstanding balances - to prove you’re a dependable candidate to a mortgage lender.
Cancel unused credit accounts that you no longer use – so long as there are no outstanding balances, of course. However, always keep at least one outstanding, as this is proof that you’re financially stable enough to pay back owed money on time.

Prepare for early reservation fees

When buying a new build home, generally most builders will want you to pay for your mortgage around six months before the property will be ready for you to move in. This means you need to have your finances in order in advance, so bear this in mind when you’re house hunting.

Prevent taking out more credit before purchasing a property

Lee Cardwell says, “one of the biggest issues we have is people taking out more credit” closer to the time of purchasing a property.

This is because “even when you’ve got a mortgage offer, lenders are within their rights to credit check you right up until the day that you move house. So, [a lender] could turn around and do a credit check and withdraw that mortgage from you.”

Keep on learning

After learning new tips on how to keep in good financial shape when you’re buying a home, you’ll be ready to start the process properly. If you want to explore more information on what we’ve discussed about keeping in good financial shape, including expert house budgeting tips and more, watch this interesting online webinar from the Mortgage Advice Bureau, below:

Keeping in good financial shape throughout the buying process