Perhaps the life’s biggest financial decision you could make is buying your dream home, and hence, it requires a lot of calculated planning and risks in advanced in order to avoid any regrets later. We all know the traditional way of buying the next house is to sell the current home and have transactions complete at the same time. However, it is not as straightforward as it seems. You will need to have a strategic plan in place for arranging the funds.
You may not have a heap of money at your disposal, but if you have been eyeing on your dream property and don’t want to miss it just because you don’t have sufficient funds available to you right now, then don’t be dismayed. There are a number of finance options available that could be the best way to make your dream home a reality.
But, before you plan on buying a new home, EVALUATE YOUR BUDGET
Assess your financial situation to know how much savings you have and how much funds you are going to require to buy the home you want. Moreover, consider the additional costs that would incur, such as stamp duty fees, registration charges and other expenses. This would help you in understanding what your target is, so you can prepare well to achieve it. If you are running short of money, you might need to borrow money from friends, relatives or mortgage providers.
Here are a few ways that can help you in building a financial plan, so you can purchase your dream home without stressing your budget.
#1 Sell Your Existing Home
If you are fine with living in temporary accommodation while you purchase your new property, you can sell your current home to free up some funds. This might mean living in a rental property, or bunking with a relative for a couple of months. Just make sure you include the cost of temporary accommodation in your budget. Depending on how old is your home, your house locality and its size, you could release a considerable amount of money. If it is still not enough to pay for your new home, you may need bridging finance solutions to supplement it.
#2 Borrow Money from Your Family or Friends
If you are falling short of money by a few thousand pounds, do not hesitate to ask your family members or friends. Some people are in a position to help supply required funds to other family members by lending them a part of the amount. Moreover, close family members would not charge any interest on the loan. You may also get to pay back the loan as per your convenience. Even if there is a little delay in repaying the amount, they will not charge any penalty.
#3 Get Financial Advice
Before you proceed to buy any financial product, it is strongly recommended that you consult financial advisers. The financial advisers will provide unbiased advice on a range of lenders and financial products, and suggest the best option suitable to your requirements. The adviser may provide basic information at free of cost, and may charge a fee for assisting you throughout the process. Some may charge for arranging the mortgage. Hence, it is necessary that you consider this cost and include in your budget. Don’t be put off to pay a fee to your adviser.
#4 Use Mortgages
One of the preferred options for arranging a long-term loan is to use mortgages. The mortgage is primarily obtained through big banks and specialist mortgage providers. The lender charges the interest based on the amount you borrow, which together with the sum borrowed is repaid over time. There is a range of mortgage schemes available in the market today. You can conduct all the research yourself, but there is no alternative to talking to a certified professional. Thus, it is advisable that you seek advice of an expert mortgage provider and discuss your requirements to get the best mortgage plan.
#5 Remortgage Your Existing Home
As the self-build mortgage interest rates are pretty high, remortgaging your existing home may seem a more cost-effective option, provided there are no early repayment charges to pay. However, you will need a substantial equity in your current home for this to be a viable option. In addition, not all lenders are willing to offer a remortgage for this type of requirement. If you are building your home and as soon as the construction is completed, you will probably want to sell your existing home and pay back the mortgage. It is wise to choose a remortgage plan that lasts no longer than 2 years and has no early repayment charges beyond this period, so you can save yourself from charges.
#6 Calculate the Amount You Have to Repay
When you apply for a mortgage, it is important for you to understand that a mortgage is a serious and long-term debt that you will be repaying every month for several years. While applying for a mortgage, the lender will ask a number of questions about your income, savings and expenses, so they can be sure that their money is safe with you and you are in the position to meet the monthly repayments. Prepare a list of all your expenditure, and set out any savings and debts you have. This will give you an idea about how much money you have, how much is required to be paid every month, and how much is left with you after deducting all expenses.
Owning your dream home is a satisfying feeling. It is a place where you not only invest financially, but emotionally too. If you are not fortunate enough to be able to afford the whole purchase price, you will need to borrow a significant amount of money in order to buy your dream home. Hence, if you are planning to purchase a home at some point in your life, Bridging Finance 4 U advises you to start saving right now. With the right financial product, advice and setting realistic expectations of your savings for your new home, you can own your dream home without any financial burden.
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