Article Title: Financial and Legal Matters Article views: (805 )
Last Modified, 2020-07-30
Financial and Legal Matters
Financial and Legal Matters
Raising the Money
To borrow money you will be subject to credit checks and enquiries about your recent financial and employment status. Research well and try to find a mortgage that suits your present circumstances as well as foreseeable changes.
A mortgage involves payment of interest on the loan and repayment of capital borrowed. The two elements may be split, as they are in Interest Only,
Endowment Style, ISA and Pension Mortgages. Mortgages involving repayment of both elements are repayment and flexible. Tracker mortgages can be either repayment or interest only. The rate of interest you pay on all mortgages may be variable, fixed or capped.
How much you can borrow is usually determined by your income, the value of the property and your credit history. Find out about mortgages from the bank or building society, (just be aware that they sell only their own products and may not be competitive) you could pay a mortgage broker or do your own online comparison research.
First Time Buyers
Your first property purchase is always going to be the hardest to fund. Most people will try to get the deposit from their parents where possible who can also often act as guarantors for your loan. Special Mortgages are available for First Time Buyers,
these are marketed as being somewhat cheaper, however be careful of the small print as often the rates are temporarily reduced and can suddenly jump after a short period, leaving you literally out in the cold! These mortgages may offer you the opportunity to take on a 100% loan, so eliminating the requirement for a deposit, but again be careful as they may carry heavy redemption penalties and so restrict your ability to sell within a restricted time period, often up to three years. In the long run it is usually cheaper to finance your purchase with a decent deposit which will ensure that you take advantage of the best rates available.
There is a lot to be said for waiting and saving for a deposit before making the move to property ownership. For a start it builds financial discipline, and this is something you will definitely need once you become slave to your first mortgage!
If you are looking to buy new build you'll most likely be offered an array of move in incentives, these are all well and good but often are recouped by the fact the purchase price is generally 30% over inflated relative to a second hand market valuation, not unlike the situation when buying a new car.. Co Purchase is another options. This is buying with others often on a joint mortgage basis, you will be jointly and severally liable for the repayments in this case. It is recommended that you have your solicitor draw up an agreement at the outset which sets out the terms for proceeding in the event of a disagreement or on the eventual sale of the property.
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