Financing

So you have decided to buy a home, what is the first thing you should do? Before you start telephoning estate agents, the first step in the process of house buying is to decide how much money you have available. To work out how much you have available to buy a property, add up the following:

• Savings available to buy a house
• Value of any property you are selling
• Amount of money you can borrow – as a guide, roughly 3.5 times your salary

Once you have calculated the total money you have available for a new property, you need to take into account the costs of buying a house. These costs will include the following, as well as any other costs which may be specific to you:

• Solicitors fees. The cost of carrying out conveyancing
• Stamp duty. The tax on buying property.
• Lenders valuation. Most lenders require a valuation survey to be carried out on the property you are buying to confirm it is worth the amount you are paying. Some lenders will pay this for you to encourage you to arrange your mortgage with them.
• Survey. As the lenders valuation is only meant to determine the value of the property, it is recommended that you take out an independent survey to confirm the property is well built, and not structurally substandard.
• Land Registry fees. To change the legally registered owner of a property, the Land Registry charges a fee relative to the value of the property.
• Removal costs. You also need to consider the cost of employing a removal firm when the move actually occurs.
• General moving costs. If you are intending to move a long way away, you may end up spending lots of money on petrol or even flights to view potential properties.
• Additional costs. Also bear in mind costs such as insurance, cancelling utility services etc.
• Emergency fund. It is not a good plan to spend all the money you have available, then have nothing left if something goes wrong. Remember to leave yourself an amount of cash spare for any unexpected costs.

Now you have added up all the costs of moving house, you can now remove this from the total you calculated above, and you will be left a figure which you can use to start looking for houses. Look for houses below this value; one of the main reasons for house sales falling through, is the buyer offering more than they have available. The next step is to talk to mortgage lenders, to determine exactly how much you can borrow.