Moving from Renting to Owning
Making the transition from renting to owning a home may seem overwhelming, but taking the process in small steps makes it much more manageable.
Finding out how much you can afford to spend on a home is the first step, as this will determine the rest of the process. Following this, securing a mortgage is essential and arranging for life assurance is a must. Packing up your old home and moving in then completes the process. When taken in these logical steps, your transition from renting to owning will hopefully be smooth and safe.
Find out What You Can AffordPurchasing a home requires a deposit and coming up with these funds can be challenging for many prospective buyers. Though 100 per cent mortgages may be available to you, most financial planners will recommend that you at least put some sort of deposit down to avoid adding length and money to your mortgage. Depending on your financial situation, the deposit sum may come from:
- Saving up. Regularly lodging money in a savings account will help you accumulate interest and raise this figure Commercial banks may also offer CDs (Certificates of Deposit) that are an option for saving money and obtaining interest on these savings A representative of your bank will be able to tell you about their entire range of investment and savings opportunities, so be sure to book an appointment if you want to start saving
- Liquidating (selling off) assets such as stocks, art or jewellery
- Obtaining a personal loan from a family member or friend
- If this is what you are planning, be sure to draw up a legal contract regarding this loan so that misunderstandings will be avoided later
- Deducting approximately £5,000 which will need to be spent on related fees throughout the purchasing process (solicitors’ fees, inspections, survey, valuation, conveyancing, etc.)
- As a tenant, remember that you should have the deposit from your tenancy coming back to you and this amount may be able to help with these fees
Secure a MortgageWith your deposit worked out and proof of your personal finances (most importantly your yearly salary), securing a mortgage is the next step in the transition from renting to buying. The frustrating truth is that most mortgage providers, including banks and building societies, will only tell you about their own mortgage offers so be sure to shop around before deciding on anything. There are many types of mortgages available today, so working with an advisor is a great idea in order to ensure that you find the best fit for your situation. Common mortgage offers include:
- First time buyer mortgages (for prospective buyers of their first home)
- Self-build mortgages (for prospective builders of a new home)
- Right to buy mortgages (for prospective purchasers of right-to-buy council properties)
- General mortgages (for prospective purchasers of any property)
Arrange for Life AssuranceArranging for life assurance is essential for anyone taking on a mortgage. Usually a mortgage is the biggest debt someone will ever take on, so making sure that it is covered in case of their death is necessary. Some mortgage providers also provide life assurance cover, but you may be able to get a better rate with another provider so again be sure to shop around before making any decisions.
Pack Up and Move InWith your deposit arranged, your mortgage secured and your life assurance covered, all that is left in the transition from renting to buying a home is to pack up your old place and move into the new one! Remember that you must settle all utility charges in your old home and close these accounts and that you will most likely need to give the property a thorough cleaning before you will be able to collect your deposit.
Making the transition from renting a home to buying a home is complicated, but it is by no means impossible. Taking the process logically and in small steps is best and you can congratulate yourself for your hard work when you own the home of your dreams.