Buying Your First Home

If you are thinking ofbuying your first home, then it is time to do some budgeting! You will have to carefully plan how you will manage the total expense of purchasing a property, including mortgage, insurance and other costs, like legal fees.Saving money for the depositTo get a loan to purchase property, you will first need a deposit. Your first action in this case is to set a savings goal. A majority of lenders will need a deposit equal to a minimum of 20 percent of the total borrowed amount. By this calculation, purchasing a $400,000 worth property will entail a minimum deposit of $80,000.Do understand that a larger deposit means lesser interest payments over the loan period. Loans which constitute greater than 80 percent of the value of a property usually carry higher than normal charges due to the lender taking more risks. These kind of charges vary from lender to lender. A few banks impose specific lenders-mortgage insurance while other banks raise the rate of interest to compensate for the risk.Once you have decided how much to save, prepare a budget. You may require to subtract the non-essentials from your daily life for some time, but the sheer joy and satisfaction of owning a new home will make up for all the lifestyle sacrifices you have made.In case of a difference between the rent currently being paid by you and mortgage repayment sum, do include that amount into your savings. This will prepare you for the future where your household budget will have to make do with a lesser amount of money.Selection of propertyYou should select a property which is affordable, depending on your budget. You may not get your dream home, but there is absolutely no point in spending money on a property when it will not be possible for you to repay the mortgage every month. Also, there are times when the best property is not much of a “looker” in visual terms. So make sure you do some in-depth research before you zero-in on a particular property.The best way to choose a property is to go through a number of real estate websites. You will get an idea of how much properties are worth in different areas. There are chances that you will prefer to buy a townhouse instead of a flat. It is good to know that a few banks do not lend if you purchase specific kinds of properties.If you consider property both as a residence and also as an investment, then you should consider its rental potential or resale value. Banks consider rental property to carry a bigger risk and they may be wary of lending the amount they would normally lend under different circumstances. The factors to be considered are:

• Is the property within walking distance of public transport services?
• Are there schools and shops near by?
• Are your neighbors renters or owners themselves?

Obtaining a mortgageYour home loan or mortgage is easily the largest financial commitment that will be made by you in your entire life. Like selecting a property, it is a wise move to go through multiple mortgage plans before you select one. Keep in mind that the repayment amount is greater than the cost of your property.Mortgages come in many varieties, each carrying its own rate of interest and fees. All these factors affect the degree of how much your loans will affect your life. You can search for mortgages by yourself or you can enlist the services of a licensed mortgage broker.