The next step in the housing process for many renters is buying a home. While renting is great for millennials who are just starting out, eventually buying a home will provide long-term financial benefits. In fact, buying a home is the best way to build equity in the long run. There may be some challenges with this transition that potential home buyers need to understand and plan for accordingly.
But there are also some great things about this transition as well. To ease the stress of moving from one housing situation to another, here are some helpful tips and tricks on how you can make the transition from renting to buying much easier.
Tip 1: Use your lifetime ISA account
One of the biggest benefits of a Lifetime ISA account is that when you have found your first home, you can use those savings to help purchase the property. A Lifetime ISA account for buying a first home is a government-backed savings account that allows you to save up to £4,000 each year that you can use to purchase your first home, and the government will add their bonus to help you get onto that property ladder. Additionally, once your home purchase is complete, you can continue to make contributions to your Lifetime ISA account and use it towards saving for later on in life. Lifetime ISA rules apply, so ensure you check these out.
Tip 2: Talk to an expert
If you’re new to the home buying process, it’s a good idea to talk to an expert about the best ways to navigate the process. There are many different aspects of the home buying process, and it’s good to have someone that knows the process walk you through things. This will give you a better understanding of what you need to do to make sure things go smoothly and that you don’t miss any important steps along the way. Estate agents can help you find a house that fits your needs and budget, and you will need to discuss your financial options with a mortgage advisor.
Tip 3: Apply for a mortgage
Before looking for a home you will more than likely require a mortgage in principle agreed before the estate agents will allow you to view any homes. This will give you an idea of how much you could borrow. Once you’ve chosen the right house to purchase, you can start applying for a mortgage. This can be a lengthy process and is something you should start working on as soon as possible. There are a few ways to go about applying for a mortgage. You can apply online or through a mortgage broker, who can help you shop around for different lenders and find the one that works best for your situation. Depending on your situation, you may be able to use a standard mortgage or a government-backed mortgage.
Tip 4: Estimate your anticipated costs
As with any major purchase, it’s important to estimate your anticipated costs when buying a house. You don’t want to get too far into the home buying process and realise you don’t have enough money saved up to make the purchase. First, you’ll want to come up with a budget for your deposit and closing costs. You can use an online calculator to get a rough estimate of what you need. Once you have an idea of how much money you’ll need to save, start coming up with a savings plan to make sure you have enough saved up when you’re ready to buy.
Final thoughts: Going from renting to buying
Ultimately, it’s important to remember that you don’t have to rush into buying a home. There is no “right” time to buy a house, and renting can be a great financial decision for some people. While renting can be great, it’s also important to realise that it’s not a permanent situation. If you want to own your own home and build equity over time, eventually you’ll need to make the transition from renting to owning. And once you do, you’ll be glad you did it.