Congratulations! You have decided that the time is now right to go ahead and buy your own property and this is most probably the smartest thing you will ever do, even though it will also be the most expensive item you ever purchase. In almost every case of property purchase you, like the majority of buyers, will need a home loan or mortgage to finance the purchase of your home. This, in itself, is a major hurdle to overcome, as there are many hidden charges and expenses of which the first time buyer is unaware.
In order to get home loans, much paperwork and documentation must be given to the lending institution, be it a bank, a building society, or any other type of property loan company. All of these lenders are well versed in asking you to provide all the information they need in order to check to see if you will be a financial risk to them or not and, if you are, to what level.
This will determine the percentage of interest they will charge on your loan or mortgage. For instance, if you are deemed to be a low risk, the interest rate will be relatively low, whereas if you are assessed as a high risk, they will charge you their highest rate of interest so that, should you not be able to repay the loan, they will not be out of pocket and will still have made a profit. After all, these financial lending institutions are in business to make the highest profits they can to satisfy their shareholders. It is therefore in your best interest to ensure that you have the highest possible credit rating, that you have a savings account in place and that you have proof of steady employment.
Once you have handed over all the information and documentation that the lender requires and it has decided to go ahead with your request for financing, you need to be aware of all the hidden costs that will be charged to your account. These charges will be added to the initial amount of the mortgage that you asked for and thus increase the total sum of the loan amount and therefore the monthly interest payments.
There is only one specific charge that will be made where you have no choice in the matter and that is for Stamp Duty, because this is a form of taxation, is government controlled and is charged on a sliding scale according to the value of the property in question.
The remaining hidden costs which all home loan lending institutions charge are all negotiable. The first is an Application Fee. Be aware too that you will be required to pay the legal costs of the lender’s solicitor as well as those of your own legal advisor. Another charge is that for the surveyor employed by the lender to inspect the property you wish to purchase, in order to ensure that the foundations and structure is sound and that you are paying a fair price, so that there is no risk to the lender of negative equity.
The market seems to be recovering but in reality the jury is still out. We can only take advantage of these low rates and closing costs now while the getting is good!