How can I afford to buy a house?
A loan that is usually secured on the property – this is called a mortgage. There are many suppliers of mortgage finance, of whom the most common are banks and building societies. Click here to find more about mortgages.
Try the MoneyBasics mortgage calculator to obtain an approximate figure of the amount you can afford to borrow and how much your monthly repayments would be.
What other costs are there in buying a house?
Apart from the actual purchase price, there are other costs that need to be considered when buying a house:
- Interest, fees and charges on the mortgage.
- Most people take a mortgage when buying a house and interest paid on top of the repayments is the cost incurred with this option.
- The interest rate that you are charged will depend on the mortgage deal that you took out.
Some mortgages have interest rates which are fixed for a certain amount of time i.e. 2 years, and others are variable and can be designed to ‘track’ the Bank of England’s base rate. Higher Lending Charge (HLC)
The HLC was formerly known as the Mortgage Indemnity Guarantee (MIG). The borrower is often passed on the cost of a HLC to protect the lender against defaults on repayments. In the case of the borrower failing to repay the mortgage, the lender has no alternative but to repossess the property. Find out more.
However, in certain cases, the sale proceeds of the property is not enough to cover the outstanding debt.
The HLC protects the lender in such cases because it is normally used to purchase a mortgage indemnity policy, which can be claimed on by the lender if the property is repossessed, and where a shortfall results in the amount recovered on the sale of the property. Contact us for more.
Mortgage Protection Policy (MPP)
MPP is a policy specifically taken out to cover the outstanding mortgage if the borrower dies so that the dependants are not left to pay off the debt.
Other finances in the property market
Bridging loans are a great solution for people that need fast access and a short term investment to close the gap while other finance is secured. All bridging loans are secured which means the borrower will use property o land a security to the lender. For bridging loans for properties, visit this site.