The basics of paying for a mortgage
Making a budget is a great idea when you’re thinking of buying a house. Working out what you can afford to pay each month on your mortgage repayments can help you decide how much you want to borrow – and which home you can afford.
Ask yourself these questions:
How much money will you have after your monthly payments?
You’ll have to factor in living expenses like food, monthly bills, childcare and any money you spend on transportation or car repairs and insurance. Work out your complete outgoings to find out how much you could afford to pay in monthly mortgage repayments.
It’s also nice to have spare cash for social occasions, treating the family or to save every month. Think about how much per month you’d want to spend on this.
Are financial commitments affecting your budget?
If you have any credit card bills, student loan repayments or direct debits, consider these when budgeting. It’s also worth including things like regular commuting costs when you’re working out what you can afford every month.
How much money will you need to pay for moving?
The cost of moving home can be more expensive than you think. Removal firms, storage space and travel expenses all mount up. You’ll pay this on top of your deposit, so make a rough estimate of your moving costs when you’re looking to get a mortgage.
How much deposit can you save?
A bigger deposit can give you a better chance of securing a lower interest mortgage deal.
You should work out what you can afford to save each month and whether the money you have now is enough for a sizable deposit. Find out more about how to save for a mortgage deposit.
Could any government schemes help?
Government schemes – like shared ownership mortgages – could help lower your costs. This is where you buy a share of your property, then pay rent on the rest. This could help if you’re a first time buyer.
What other fees are there to pay?
There are also factors like conveyancing, estate agent and solicitor fees to consider when working out the costs and fees of getting a mortgage. These can be added into the total mortgage cost or paid from savings.