Everyone looking to buy a home faces that moment when they wonder if they will be able to afford the home they want. As a prospective homeowner, maybe you have already done some searching and found the one home that just stands out to you as a perfect fit for your family. Or maybe you are looking at your budget and using that to temper the kind of searches you are making for houses.
Whatever your situation, you are probably concerned about how much your new home will cost you. You want to find some place that you will be happy with, but you also want to be able to afford it without having to make a lot of major changes to the way you live. That’s why you need to find out more about mortgage rates and the cost of paying for that home.
Mortgage rates vary quite a bit, starting as low as 0.98% and going up as far as 1.5% or higher. But that is just the initial rate. Usually the rate will increase after a few months or a few years. The increase is typically up by several percentage points, so an initial rate of 1.0% could increase to 4.99% after a short while. Prospective home owners should not be thrown off by those initial rates, as almost nobody pays off their home before the rates increase.
There are also initial fees to consider as well. Those lender fees or application fees (and they go by other names as well) can range anywhere from £0-£2,000. This kind of fee is usually a onetime payment, but it is important to include it in your figures.
The mortgage rates will be based on the value of the home, and the entire mortgage will be set up to be paid off over the course of several years. It is essential that you plan for the entire mortgage payment period and not just the first couple of months. You don’t want to know you will be able to make payments for a little while and then just wing it after that. If you are not sure you can make the payments month after moth for the duration of the payment plan, then you should seriously reconsider purchasing a home.
So how do you plan two years, five years and even further ahead? The most important thing you need to factor into your budget is your job. You need to make a determination as to whether your job is stable. It is not just your position at your place of employment that should be stable but also the market you are in. You should be aware of whether you are working in a volatile market that is apt to change on a whim.
There are a few different websites you can use that will give you an idea of how much you will pay for your mortgage. For example, Clydesdale Bank have a handy mortgage calculator that can help determine mortgage costs. If you know the kind of market you are searching for a house in, you can use that information to get a reasonable estimate.
Then just budget out your expenses to see if you can afford the rate. If you can only just afford it, you may want to reconsider as well. That is because if you fail to make mortgage payments on time, the house could be repossessed.