New Homes: Mortgage and finance advice that could save you money
Compared to the big outlay needed to secure ownership of your home, the ancillary costs might seem relatively insignificant, but they do add up to a significant sum.
The kind of rates that are available can be divided into the two main categories of âfixed rateâ and âvariable rateâ.
The variable rate is, as the name suggests, subject to varying from one month to the next â all at the mercy of the vagaries of the money markets. It means uncertainty (if your mortgage repayment is âŹ950 this month, thereâs no guarantee that that wonât change next month) but rates can go up as well as down, so if thereâs a rate drop then you should see a reduction in your monthly repayments.
The other advantage of the variable rate is that if you come into some money, you can pay the entire mortgage off without incurring any penalties.
This is not the case if you choose a fixed rate, where paying off the mortgage before the end of the fixed-rate period means that you have to compensate the home loan lender for rupturing that contract.
The very attractive advantage of the fixed-rate mortgage, however, is that you know what youâre paying every month into your mortgage, so there wonât be any surprises during the fixed-rate period; interest rates going up wonât affect your monthly repayments while youâre locked into a fixed-rate arrangement.
Right now, we have returned to an era of stability and low rates. The result of that is that the fixed rates are offering very attractive value for money and it might be a good time to fix now in case that rates start going up again over the next few years.
The best rate for you is a personal choice but as someone who worked for the largest lender in the country at the time told me 30 years ago, âthe best rate is simply the cheapest rate â thatâs the one Iâd go for every time!â
Getting your snag list in order is an important part of the preparation for buying a house. With so much to consider, itâs important not to miss a trick. A good solicitor will already guide you well in this area, given their experience in watching out for the things that can snag you up along the way.
âRegarding an initial checklist, it is crucial for the buyer to meet with a bank or mortgage broker to establish their budget,â advises Elizabeth Hegarty, divisional director, residential, with Savills.
âFrom there, set out your criteria in order of priority. In most cases, budget will dictate initially. After that, considerations such as location, number of bedrooms, public transport, amenities, schools etc. come into play. You should have all this in mind, as well as what criteria you are willing to bend on, should it not tick all the boxes.
âItâs also important to register your interest with the agent as in a lot of cases, launches wonât be announced online and will be released only to those interested parties who have registered with the agent.âŻ
âRegarding a snag list on the home, it is crucial to go with an engineer that comes recommend by a friend, family member or your solicitor. A snag list is a vital part before handover of your new home. Ensure all warranties (Homebond etc) are in place before closing.
The headline costs when buying your home speak for themselves â the cost of the house and a budget for any improvements that you might want to carry out. We all know that this isnât the end of the story, however, and that there will be more bills to pop up. But theyâre all just a few little bits here and there. Right?
Compared to the big outlay needed to secure ownership of your home, the ancillary costs might seem relatively insignificant, but they do add up to a significant sum; and a sum that needs to be paid before you can turn the key in the door of your house.
The list below acts as an informative guide on the things you need to plan and provide for:
Itâs a necessary cost, of course, and rates can vary very much, but around âŹ450/annum should suffice.
Another necessary bill and the basic requirement is a policy that covers the balance remaining on your mortgage in the event of oneâs death. You can enhance the product by adding cover against serious illness or sudden income loss. One can also have a policy that pays out the initial sum borrowed regardless of what is left to pay. For the basic cover, âŹ200-âŹ300/annum.
Nowadays, itâs 1% of the price of the house â a small amount compared to what people paid a few decades ago. If the house price exceeds âŹ1million, then a 2% rate applies to the amount over the million-mark.
Youâre not legally obliged to pay this one, but your solicitor will always advise you to do so; which means you probably should! Expect a bill for around âŹ350 for this one.
This is another bill that youâre not obliged to pay but those who do pay someone to draw and check a snag list tend to consider it money well spent. âSnaggersâ are increasingly in demand so book them well in advance and put aside around âŹ200.
For many First Time Buyers, itâs also the first time they employ the services of a solicitor. Trust is the important part of your relationship with your legal counsel and the price is (arguably) of secondary importance. A rough ballpark figure would be in the region of âŹ2,000.
The lending institution wonât release your loan cheque until an independent valuation is carried out on the house, at your cost, which should be around âŹ300.
