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Pre-house move planning – PART 2

house-move-part-2

 

Pre-house move planning – PART 2

In our first article in this series, we highlighted a few questions you should consider asking your seller… just to make life a little easier once you’re in your new house. This time we’re focusing on the preamble to the dreaded ‘P’ word… Packing. It has to be said, a little pre-packing planning goes a long way.

Top Ten Pre-Pack Planning Tips

Once you’ve poured a glass, cleared your mind of day-to-day concerns, and decided to think about packing, that’s the time to grab a pen and paper and start making the next list. Get the pre-packing planning just half right, and you’ll make the whole process A LOT smoother on the big day. So, what should you be thinking about? Here are some thoughts…

  1. Declutter first – seriously. Yes, it’s a daunting job, but remind yourself that the more you declutter now, the less you’ll have to pack. Imagine how much lighter you’ll feel if you can ditch a quarter of what you currently have. It’s so worth it.
  2. Buy packing boxes in a variety of sizes – And when you do pack, don’t use the big ones for books!
  3. Also buy bubble wrap, strong tape, small bags, marker pens and packing paper (newspaper does an excellent job too) – And buy a bit more of each than you think you’ll need. When you’re in the packing groove, you don’t want anything to break the flow.
  4. Check your contents insurance will cover you for loss and breakages whilst you’re on the move – You can tell your insurance company your new address at the same time. Oooh, it’s so nice to tick two boxes at a time, eh?
  5. Pack hazardous and corrosive materials separately – No explanation needed.
  6. Pack an Essentials Box for your first day/night – Think of it as a weekend bag for a house. This will include things like a kettle, coffee, tea etc. Plus plates, cutlery, cleaning cloths and washing up liquid. And don’t forget to pack a spare LOO ROLL!
  7. Pack an overnight bag for everyone else too – You know, washing kit, towels, PJs, fresh clothes etc. Even a hair dryer, if that is an essential.
  8. Consider adding a tool kit, first aid kit, torch and rubbish bags in your essentials box – Or at least make them part of an Essentials Box B.
  9. Make sure your Essentials Box(es) and overnight bag(s) are easily accessible – In fact, we’d recommend you transport them in your own car, rather than the removal van.
  10. Never lose sight of the fact that this is all in aid of something great – Because believe us, at times you’ll lose the will to live. Nothing’s forever, as they say. Hold onto that thought.

Hopefully the above has given you a few ideas, perhaps even prompted you to think about things you hadn’t yet thought about. And, as we said before, if you have any top tips yourselves, please do share them with us. Part 3 – Top Ten Packing-Beware Tips – coming next!

As a First Time Buyer, How Much Can I Borrow?

Following on from our introduction to mortgages for first time buyers, one of the first questions we get asked is: How much can I borrow? There isn’t a straight forward answer to that, and here’s why…

How much can I borrow?

Before the recession, lenders typically calculated how much they would lend by applying a multiplier to the applicant’s salary. For example, if you were buying a house on your own, they might have typically been prepared to lend you four times your salary. If you were buying as a couple, they might have typically been prepared to lend you three times your joint salary. Those days of simple calculations, however, are over.

Now the key consideration is affordability. Whether you’re a first time buyer or not, the key questions are: Can you:

  1. a) Afford your monthly payments now?
  2. b) Continue to afford them if interest rates increase?

A far more detailed inventory of your income and outgoings, therefore, is now assessed. Once you’ve bought your food, paid your bills – including credit card spending and other loans – and covered the costs of running your car etc., how much is left every month? Once that’s been calculated, does the answer to the questions above stack up?

And there’s an additional aspect too… Don’t forget that how much a lender will allow you to borrow isn’t just about your ability to afford the payments. Your credit score and previous payment history on other loans is also taken into consideration. This can be where applications fail to get approval.

So it’s probably becoming clear now that it’s not possible to give you an easy answer to the question: How much can I borrow? It’s worth considering speaking to an adviser.

How much do I need to save for a deposit?

People groan at the thought of having to pay a deposit when buying a house. And yes, it does tend to be quite a substantial sum. However, it can serve to protect you in the future, so on balance it is a good thing.

The terminology that’s often used is ‘Loan to Value’. It’s unlikely that you’ll find a mortgage for anything more than 95% of the value of the property, and this would be referred to as an LTV of 95%. So, if you are going for an LTV of 95%, the minimum deposit you’ll need to have saved is 5% of the value of the house you want to buy. There is a good reason, however, to try to put down more than this…

You are far more likely to get a better rate the more deposit you put down. Going from only paying 5% to paying 10% deposit can make a huge difference to the rate you get, as well as the monthly payments you will have to make. If you can go even higher, the rates improve even more. Think of it like this:  The more deposit you pay… the less you borrow… the better rate you get… the less your monthly payments are… which means, overall, the cheaper your mortgage is.

Other articles in this series written for first time buyers…

 

I’m a First Time Buyer… Do I Need an Adviser?

If you’re reading this article, then you are probably the sort of person who likes to be informed before you make a decision. You may understandably, therefore, be wondering if you need an adviser at all for your mortgage. Notwithstanding the fact that you’re a first time buyer, and this is your first mortgage, you’re thinking you should be able to pull it all together yourself and not have to pay for the services of someone to do it for you. And that’s very possibly the case, but it’s worth being aware of what benefits you get if you go through an adviser.

An adviser affords you a level of protection

Any advisers providing advice on mortgages have to be qualified to do so. Other than the fact that this means they understand the complexities of the mortgage market, an adviser who is regulated by the FCA (Financial Conduct Authority) also has a duty of care to you. They have access to the whole of the market and, because of this duty of care, have to recommend a mortgage that is suitable to your circumstances. If they fail to do this, you are protected and have the right to complain and be compensated.

An adviser is on your side

Because advisers have access to the whole of the market, they really are looking for the best mortgage for you. They aren’t on the lender’s side, and their advice is unbiased. If one lender doesn’t offer the right sort of product for your circumstances, other lenders will. An adviser will seek those products out.

They have experience and knowledge – things that take time to build up

Submitting an application for a mortgage these days isn’t as simple as just filling in a form. There are a lot of hoops to jump through to prove that you can actually afford a mortgage, and it’s easy to make a mistake. With this in mind, it’s worth knowing that each lender has its own preferred criteria. An adviser understands what these are and can therefore save you a lot of time and heartache.

Other protection

An adviser is mindful that it’s worth borrowers being aware of other financial products available when they have a mortgage. Life insurance, for example, to ensure the mortgage is paid off in the event of the mortgagee’s death. And of course, there’s buildings and contents insurance too.

A good adviser, who has experience and knowledge, will also be able to provide you with advice on other types of protection too with respect to your mortgage arrangements. Examples would be:

  • Death cover
  • Critical illness
  • Long term illness
  • Payment protection

But how does an adviser make their money?

There are two ways an adviser can earn their crust:

  • By charging you a fee
  • By receiving a commission from the lender – for putting business their way

Either way, however, it’s important to note that your adviser has to provide you with a Key Facts document that details any fees or commissions they make.

In summary…

Only you can decide if the benefits of using an adviser are right for you. It’s true that they will either charge a fee or make a commission for their services. However, in return for that, as a first time buyer you are working with someone who not only has knowledge, experience and access to the whole of the market but is also helping you find the best mortgage for your circumstances.

Other articles in this series written for first time buyers…

Introduction to Mortgages for First Time Buyers

Buying your first home is an exciting but nerve-wracking time. There is a lot to take in and understand. So, bearing in mind how important it is to get things right, we thought that a series of articles specifically addressing the concerns and queries of first time buyers would be helpful. The topics that we cover in this series are:

What is a mortgage?

First things first, it’s worth remembering that a mortgage is, in essence, just a loan. What makes it slightly different to other loans that you may take out, though, is that it:

  • Usually runs for a longer  period – 25 years is a common mortgage term
  • Is secured against your property

What does that second point mean? Well, it means that in return for lending you money to buy the property, a lender protects themselves by putting a charge on it. This means that in the event you cannot, or simply stop, paying your monthly payments, they have the right to repossess the property, sell it, and recoup their money.

How does a mortgage work?

We’ll cover this in more detail over the next few articles, but in summary once a mortgage policy starts it is broken down into these components:

  • Deposit – This is the initial payment you pay and is not included in the capital amount you borrow.
  • Capital – This is the amount of money you borrow.
  • Interest – This is the amount your lender charges you for borrowing the capital until it is paid. Depending on the type of deal you choose, this may be charged at a variable, fixed or capped rate.

You then pay back the interest and capital to the lender, usually on a monthly basis, until the loan is paid off. The usual term is 25 years, but it can be shorter or longer depending on your requirements and circumstances.

What happens if I can’t pay my monthly payments?

It’s important to note that throughout the length of the mortgage policy, the loan is secured against the property you’ve bought. This means if you can’t afford to make your monthly payments, your lender will have the right to repossess your home and sell it to recover the amount you still owe. Plus, you need to be aware that if they sell your home for less than the outstanding amount, you still owe them the difference.

It is very important, therefore, to only borrow what you are sure you can afford to repay on a monthly basis. And it’s critical that you pick the right sort of mortgage from the start…

To find out more about mortgages for first time buyers, please see the other articles in this series.

Other articles in this series written for first time buyers…