Thinking of Applying for a Mortgage? How to Calculate How Much You Can Really Afford
Thinking Of Applying For A Mortgage? How To Calculate How Much You Can Really Afford
It is normal for a person or family to think through their finances, figure out how much they can afford (based on their income and savings) and then buy a property based on that person or families needs. Although everyone would like a larger property, overstretching is a common mistake – on the other hand, it would be a shame to buy a property on the conservative side because of fear. The key is to be realistic, in both your expectations and your future options. Thinking of applying for a mortgage? Here’s how to calculate how much you can really afford.
Things to consider
A mortgage is not just any ordinary loan you receive – it is probably the most important decision of your life when it comes to your finances. You have to be willing to make a long-term commitment that will span a long time, often two or three decades. It needs a lot of consideration. Some considerations:
- Your standard of living
- Your professional future and possibility of increase in income
- Your expectation on house prices and market fluctuations in the future
You will not just be spending money for the house that you plan to buy – you’ll be spending money on interest, as well as various fees and charges such as:
- Stamp duty
- Removal cost
- Furniture and white goods
- Home and Contents insurance
- Household bills
- Mortgage broker fees
- Life Insurance
- Maintenance and building work
These costs often run up to 7% of the value of the house – and depending on your current situation this could reach much higher.
Getting the right mortgage
There are many things that you will need to work out, the first one being the budget that you are able to set aside for the house itself. You will then need to ask a professional such as a mortgage broker Bristol from Open Vision Finance to work out a good mortgage deal that works for you. Look around, do your research, and ask a professional mortgage broker for advice. Having the correct advice can save you money.
Questions to ask yourself
- Do you plan to have (more) children in the future?
- Do you plan to change jobs in the future? Do you want to start a business?
- What are your chances of promotion?
The truth is that it is not always easy to work these things out. There are many variables at play and finding the answers to important questions often takes a lot of time and much consideration. It is always recommended to consult an expert when it comes to mortgages; there are many kinds of mortgages and it is always wise to rely on those who have studied the markets and understand the underlying dynamics of the mortgage market. Most importantly, is that you are honest about your plans for the future, and anticipate unforeseen events.
YOUR HOME WILL BE REPROCESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE PAYMENTS