First Time Buyers - Working Your Way Up The Property Ladder

You’ve moved in, you’re paying your mortgage; you’re ready to finally breathe out…Congratulations! You are now a homeowner, and should be enjoying the change. Now you’re firmly on the property ladder, you can start to make the most of your new status.

With sound judgement and a little luck, the next move you make will be up the way. While the economy is stable and house prices continue to rise, your property will be gaining value year on year. The difference between what you paid and the new value is your ‘equity’, and if all goes according to plan, you should make a bit of profit when you come to sell your house.

However, you don’t have to sell up to take advantage of your equity. Second mortgages and remortgaging are covered elsewhere in the guide, and show how you can take advantage of your property’s worth. Meanwhile, sound management of your investment covers two areas:

Tend Your Finances

Keep an eye on the market. If your circumstances change, you may want to change mortgage too. Make sure that you have some kind of insurance protection in place, like payment protection or salary cover. This means that if you suddenly lose your job or fall ill, your mortgage payments will be covered and you’ll have one less thing to worry about. You may also want to take out contents insurance – which can cover your possessions against accidental damage and loss as well as theft or break-ins.

Look After Your Home

You should be paying buildings insurance, which covers the fabric of the building including its structure. If you live in a flat or shared building, there may also be factor’s fees to pay. (Sometimes your buildings insurance is covered by the factor.) If you notice any problems, such as leaks or damp patches, investigate them straight away. Problems left untreated can become much worse, and could affect the value of your property. Get a tradesman in to ascertain the source of the problem, and give you an estimate of the cost. Check with your insurance company whether they will cover the bill – policies often come with lots of loopholes and clauses

Consider Resale

When planning any home improvements or redecorating, bear in mind that you may want to sell your property at some point. For any alterations to the fabric of the building, check with your local authority to see if you need planning permission or a building warrant.

First Time Buyers Beware

Although it’s a big undertaking, buying your own home is one of the wisest moves you can make. Rather than pouring money away on rent, you will effectively be investing in your property with every mortgage payment.

You will also become a ‘homeowner’, which should please your bank manager no end. You may find offers of loans and credit suddenly become a lot more frequent, and when you’ve just moved into a new home it can seem tempting to borrow money to kit the place out. But be careful! Most repossessions happen in the first year of the mortgage, when people find they have overstretched their finances and can’t meet the repayments. These are a few factors you’ll need to consider before you move:

Fees and Stamp Duty

You’ll find there are quite a few extra costs involved here – solicitors fees for conveyancing are normally a percentage of the cost of your mortgage, plus there are other charges involved. Check with your solicitor what his or her bill will be. Stamp duty is a tax that applies on property that costs over £100,000. If you’ve used a mortgage advisor, there will be another fee to pay, probably of a few hundred pounds.

Surveys

These can prove costly – each survey will set you back around £150 to £200 pounds. Sometimes the surveyor will ask for a report from a specialist – for example, a timber professional – that could cost the same again. If there are problems with the property that need to be remedied, you may find a portion of your mortgage withheld until the work is carried out. This is called a retention, and means you’ll have to find the extra cash yourself.

Moving Costs

You could move your entire household in the back of your car, but it’s not the ideal option! Hiring a van or removal men can be quite expensive – but it might make moving less stressful.

Insurance

Remember you will need to pay buildings insurance as a condition of your mortgage. You may also choose to take out payment protection in case there’s a sudden change in your circumstances. This means your payments will be covered for a set period of time, to give you a chance to get back on your feet.

Furniture and Renovations

While not necessarily essential, re-furnishing your new home should be enjoyable! Make sure, however, that you are not overstretching your budget.

Bankruptcy Information

Bankruptcy is a situation in which someone who owes money will seek relief from their debts by going to court. Though bankruptcy can be good in some situations, it may not always be necessary. Just because you are in a financial strain does not mean you should immediately file for bankruptcy. There are some things you will want to take into consideration first.

Will I or Won’t I?

There is no easy answer to whether or not you should file for bankruptcy. Before making a decision you should first consult an attorney or credit counselor. They will be able to look at all the factors involved with filing bankruptcy, including the advantages and cost. The amount of debt you have is one of the most important factors for whether or not you should file for bankruptcy. It is important to remember that there are many alternative solutions. One solution is to hire a financial manager.

The Financial Manager

Hiring a financial manager is a difficult decision for many people. They take control of your finances, and will pay your bills for you. They will give you a set amount of money to use for anything you wish, but their goal is to make sure all of your bills are paid on time. Using a financial manager is a good idea if you find that many of your problems come from being irresponsible with how you spend your money. Once your bills are under control, you will be given back control of your finances. If this makes you uncomfortable, you could simply use a counseling service. You also want to make sure you use a service that has an excellent reputation.

Many lenders will work with the borrowers in paying back the money owed. It can be difficult for a lender to get back all the money they loaned out to you, even if you file for bankruptcy. Taking you to court will cost them money, and is very time consuming. When collection agencies get back the money that is owed, they will often charge the lender fees, and this will reduce the amount of money they get back. Because of this, many lenders will waive certain fees or charges as long as you make your payments on time.

Refinancing Your Home

If you are the owner of a home, you should consider refinancing in order to use the equity to pay off your debts. This could be a great alternative to filing for bankruptcy. You are likely to get tax deductions for using this method of paying off your debts, and you will also be likely to have much lower interest rates over the long term. You should be cautious when choosing which debt consolidation company you want to use. Many companies will charge you huge fees up front and leave you with a loan that will take years to pay off.

Be Wary Of The Credit Repair ‘Services’

You should also be careful with so called "credit repair" services. Any service which promises to pay off or eliminate bankruptcy from your credit history are likely to be fraudulent. They will end up taking money from you and perhaps making your credit worse than it was before using their services. It is important to only use services that are highly credible. Avoid fly by night operations at all costs. They will leave you in a world of despair and make huge profits at the same time. You should only file fof bankruptcy after you've talked to an attorney or credit counselor.

While bankruptcy can relieve you of the debts you owe, it will stay on your credit record for years, and it will be very difficult to apply for a job, home, or even a car. We live in a society that is very credit prone, and it is important to have good credit.