It’s certainly an exciting time in anyone’s life, but purchasing a house is a massive financial commitment in both the short and long term. First things first, it’s worth going a little research, travelling into new towns or villages that you would like to call home before you take the plunge. After all, if you move into a new area without “testing the water” you could be in a tricky situation if you find yourself wanting to move on. This article will take a look into the house buying process, what finances you should consider and how you can build up a solid deposit. |
In most situations, when you purchase a property you have your deposit ready. This is the case for 90% of house purchases, however if you already own a property gaining an initial deposit is not necessarily required. Let us explain. However, you need to remember that there will be additional payments for moving home. Such as Man and Van in Chelsea, stamp duties and estate agent fee's.
On average, a first time buyer will be aged between 23 and 28 years old. Realistically, you would be living at home with your parents before any relocation and this is the perfect opportunity to get some cash saved and a healthy deposit behind you. For example, there are new houses being built in the UK that only require a 5% deposit. Let’s say that you want to purchase a 2-bedroom new property with a value of £200,000. That means that you will only need a deposit of £10,000. In round figures, you could have your deposit saved in 3-years if you saved £277 a month. Naturally you could get your deposit together a lot faster if you decided to save more money each month. However, it’s important not to completely remove your disposable income. Make sure that you leave yourself some cash to go out with and spend time with your friends and family.
Another way to get a deposit together is to use the funds that are generated from your previous homes sale. For example, let’s say you live in a property that was worth £200,000 when you first purchased it. Over the course of three years, the value of the property has increased by £10,000 and the property is now worth £210,000. If you put your initial 5% depot down when you first purchased the home you would need to settle the outstanding amount on your existing mortgage. For arguments sake, let’s say that you had a deposit of £10k and a mortgage of £190k. Over the three years you have managed to pay off £20k of the mortgage so the outstanding mortgage amount is currently £170k. You sell your home for £210k and pay the bank the outstanding £170k, leaving you with £40k. There you have it! That £40k is now your money to do with as you will. You can choose to place it all down as a deposit on a new property or you can use part of it and safe the rest. A lot of homeowners tend to save a little of any money they make on property and use it to help make a number of home improvements such as kitchen refits or bathroom installations.
Davis and Mac are a professional removals company in Fulham and support London and the immediate surrounding boroughs.
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