Why switch from renting to owning?
Renting can be a great way to gain your independence.
Whether you’re moving out of your family home, or moving to a different area, you can experience what it’s like to fend for yourself, such as managing the household bills, cleaning, cooking etc.
But if you’ve been renting for a while, you might now want to spread your wings and take the next step up onto the property ladder and consider buying somewhere you can call your own.
What do you need to know about home ownership?
In all honesty, aside from the financial commitment, there isn’t a huge difference between renting and buying, as you’ll still have to make a monthly payment, but it will be a mortgage payment to your lender rather than a rent payment to your landlord.
The main things to make sure you account for are:
1) Paying the deposit upfront - For many, this is the biggest hurdle when it comes to buying your own house.
2) Taxes and insurance - Stamp Duty will need to be paid on properties over £300,000 outside of London and £500,000 within London. Insurances, such as life cover and building and contents will also need to be considered.
3) Extra fees, such as surveys and solicitors - Make sure you have enough money left in the pot to cover the costs of surveys and solicitor fees.
4) Maintenance costs - In rented accommodation you can fall back on your landlord if you have any maintenance issues, such as the boiler stops working etc. but when you own your own home, you are the landlord! Therefore, if anything goes wrong, you need to make sure you can pay to get it fixed, so you’ll need to keep an emergency fund to one side.
Your credit score.
Although you would have needed a good credit score to in order to rent, there’ll be further affordability checks that you’ll have to pass before the lender agrees to lend you the money.
You’ll often find that it is the unpredictable nature of life events that can give you that final push from renting to buying.
Perhaps your landlord is deciding to sell the property, perhaps you’re having a baby and need somewhere with more space, or perhaps you want to move to the next stage in your relationship and live with your partner.
One thing that’s for sure when buying a house is the long term commitment that it requires.
For many, a mortgage will be the largest financial commitment you ever have so you need to make sure that you’re absolutely ready and know how much you can borrow.
However, it’s not just the financial commitment you need to be sure about.
You need to be ready to settle down in one area and know that this is the right decision for you.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1%, but a typical fee is £495.