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Thursday, 19 August 2010

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Buying a home

Are you looking to buy your own home? Buying a property is probably one of the biggest commitments you will ever make. Understanding the process will help you make the right choices.

These articles will help you:

  • find out how much you can afford to borrow
  • choose the right mortgage
  • be aware of all the money you will need to find
  • get the right insurance

We also have information on Islamic mortgages.

How much to borrow?
How much you borrow affects what property you can afford. Mortgage companies lend money based on your income. They also take into account your usual outgoings, particularly the big stuff such as loans.

However, it's just as important that you work out how much you can afford to pay every month for a mortgage, as well as all the other bills. You need to consider how you would cope with a rise in interest rates or cost-of-living expenses or a fall in the value of property.

What type of mortgage?
There are many different types of mortgages and providers. There is a lot of unavoidable jargon to understand. The information on Moneymadeclear, from the link below, can help with this.

Shop around
You need to shop around to get the right mortgage for you. There are two main options on shopping around:

  • You can do it yourself, by checking with a range of mortgage providers. You will probably find comparison sites helpful: find a link to our mortgage comparison tables below.
  • Alternatively, you can get advice from a professional mortgage adviser. Always check that your adviser is authorised by us, using the FSA register; again the link is below.

Or you could do both.

Insurance
When buying a home you need to think about certain insurance products.

  • Life insurance: not a cheery subject, but if you die, you still owe the bank the money you have borrowed. If you have any dependants, this could leave them with severe difficulties. Your mortgage provider will probably offer to arrange this insurance, but you can always shop around.
  • Buildings and contents insurance. Again, you should shop around to get the best policy for you.
  • Mortgage payment protection insurance (MPPI). This is also known as accident, sickness and unemployment cover (ASU). This aims to help you keep up your mortgage repayments if you can't work due to redundancy, accident or illness. You do not have to take this out and, again, you can shop around. If you do decide to take MPPI, it is important to check that it covers your circumstances.

Find out more

We've put together a short list of resources you might find useful. This is a cross-section to start you off, but you may want to do some more research. Some of these resources are on other websites, so you need to be aware that that CFEB is not responsible for content you find on these websites.

Users can rate articles with between one and five stars; this is not a CFEB rating. But we have marked the articles 1-3, based on how detailed they are. If you are looking for a very quick introduction, look for level 1; if you are ready to find out more, go for a 3.

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Articles

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Moneymadeclear
For information on how to budget, the different types of mortgages available and comparison tables to help you choose the right one for you.
www.moneymadeclear.org.uk/hubs/home_mortg
ages.html
2
Moneymadeclear > Buying a home
Step-by-step guide > Buying a home
www.moneymadeclear.org.uk/guides/home/buy
ing_a_home.html
1
Shelter - Shariah mortgages
A comprehensive article on Sharia mortgages.
http://scotland.shelter.org.uk/getadvice/advice_
topics/paying_for_a_home/mortgages/getting_a_mor
tgage/shariah_mortgages
1
An CFEB Recommended read

Tools and Calculators

Moneymadeclear - Mortgage tables
MONEYmadeclear logo
Our mortgage comparison tables will help you shop around for a mortgage
www.fsa.gov.uk/
tables/bespoke/Mortgages
1
An CFEB Recommended read
Moneymadeclear - Mortgage calculator
MONEYmadeclear logo
Find out how much your monthly mortgage repayments are likely to be. This can help you estimate the size of mortgage you can afford at a particular interest rate.
http://www.moneymadeclear.
fsa.gov.uk/tools.aspx?
Tool=mortgage_calculator
1
An CFEB Recommended read
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