Thinking of Buying?

As a first-time buyer it can be difficult to know where to begin in trying to work out how much money you have for the deposit and how much to spend on your monthly mortgage repayments. Your monthly outgoings as a homeowner will differ from those of a rent-payer. So, what payment costs do you incur when you buy your first home and what kind of monthly outgoings do you need to budget for?

Before you begin your house-hunt in earnest, it is essential that you sit down and work out how much money you have for a deposit. This may not just be a question of the money you have saved towards the deposit so far, as you need to remember that you will have some one-off payments when buying your new home. These one-off payments will include:

• Legal cover
• Stamp duty
• Evaluation searches
• Solicitor's fee
• Mortgage arrangement fees

Once you have a clearer idea of how much money you have for your deposit you then need to calculate how much you will be able to afford to spend on your mortgage repayments each month. In order to do this you need to take into account your monthly outgoings – these will differ from the ones you may have at the moment and also if you move out of your current area into a new area, say from Yorkshire to London. Use the checklist below to remind you of all the monthly payments you might incur:

• Bills (such as council tax, water, gas, electric, phone)
• House insurance
• Mortgage protection cover
• Pension (if you have one)
• Annual service charges (if applicable)
• Grounds and property maintenance (if applicable)

One of the most important things to consider is the effect of any increase in mortgage payment due to an increase in interest. If you take out a mortgage where the monthly repayment amount is tied in any way to interest rates then if they change (up or down), you will be affected. It's important you are aware of how an interest rate rise of say half a percent might increase your mortgage payments.