h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Before you even start looking for a house, sort out your mortgage. You can get a mortgage offer in principle from most lenders without having to make any firm commitment. This has several advantages:-
*You will not be bothered by estate agents who insist that you see their in house mortgage advisor.
*You know exactly how much you can afford, so you don't miss out on that dream house because you think its out of your price range.
*When you do find the house of your dreams you can put an offer in immediately, especially important in the South East.

Before you get a mortgage take a look at a future value of money chart, and see how much you'll pay over the life of a mortgage. In our case, we would have payed roughly 3 times the principle amount over a 25 year mortgage. How do you ever get a return on investment there? Its a fool's game.

Independent mortgage advisors are brilliant for giving you an idea of what you can afford.
Visit one as soon as you decide you want to buy - and they will tell you about the different mortgages on offer and give you some insight into what you can afford.

When working out how much you can afford, don't forget that we have currently (in the UK) got the lowest interest rate for decades. They really have only one direction to go from here and that is up. Consider what size your payments will be if the rate goes up by 1,2,3,5% or more. If you are really stretching yourself to buy the place you could be in trouble very, very quickly. Capped and Fixed rate mortgages do protect against this a little, so you can plan on paying a definite amount for the period of the fixed/capped rate.


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