Background
We were unaware of what would be needed and we were positive we would have at least another 2 years worth of savings to complete before being in a position to look at houses.
Using banking websites and other sites mentioned in my other blogs (Money Saving) we were able to get a rough idea of what percentage we needed to put down on the house.
Does the amount of deposit make a difference?
Its not necessarily the amount but more the percentage. Generally banks ask for 10%, however you will find by putting 15% you will have a quite large reduction of your monthly repayments, also if you make the mortgage term longer (40 years maximum [this will depend on your age]) you will see another reduction. However, by making the term longer you will pay a lot more interest. Therefore look to over pay each month.
Here's some calculations to prove the difference:
First time buyer looking at a house worth £120,000 with a 10% (£12,000) deposit will pay £579 which is at 4.3% APR over 30 years.
If we now take the same priced house but now with a 15% (£18,000) £498 a month will be repaid at 4.1%APR
This give you not only a better interest rate but also over the year a saving of £972... Almost £1000 this money could potentially pay for a holiday or even knock it off the borrowed mortgage amount (which I recommend). You will find most mortgage lenders will allow a free over payment service, however the amount will more than likely be capped.
My mortgage we are allowed over pay 10% of the borrowed amount each year. Basically this means if I borrowed £100,000 I am allowed to over pay £10,000 in the first year, meaning I now owe £90,000 (this does not include the money that have been paid via the mortgage). In the second year I am now allowed to over pay £9000, the third £8100 and so on.
Finding the right bank
Halifax was my initial bank. What you have to watch, every time you apply for a credit check (which the banks do when you apply for a mortgage) you leave little foot prints (some banks leave deeper prints than others), the more applications you complete the more footprints left. Even if you apply for credit cards, you can be making these foot prints appear on your credit check.
The banks will look at this and say ''why have you applied for so many credit checks?'' and potentially stop entering mortgage negotiations with you.
Other little things to be aware of
If you have a car finance plan, previous black listing / poor credit rating or a current loan (exception of student loan), this will lower the amount you will be able to borrow. Find about how deep your chosen bank goes into your personal financial situation. Some brush the surface, where as others go deep.
My advice
Take the mortgage proposal away from the bank, read it thoroughly and think about what you are trying to do. Really look into all of you finances. Talk to people who have got a house about the bills ad what they do to manage. Its not just about paying the mortgage, but also the food, gas, electric, insurances, council tax, water bills . . . phone bills, internet etc. Really think and plan it all out.
Showing posts with label money saving. Show all posts
Showing posts with label money saving. Show all posts
Sunday, 10 June 2012
First Time Buyer’s Information: What Insurances Do I Need?
When you first take out a mortgage with an adviser my simple thing to remember is:
The more insurances you take out the more money the adviser will make.
A typical insurance will make the adviser around £400.
When we first sat with our adviser he gave us insurances for building, contents, loss of earning, life, sickness and redundancy this totaled up to around £2000 which would sit quite nicely in hit back pocket, but around £200 a month coming out of ours.
By law you do have to have life insurance cover however I am not too sure with regards to building and contents.
After carefully shopping around and reading the small prints we pay around £50 for all of the insurances (life, critical illness, buildings & contents).
You have a cooling off period for all insurances, this is usually 28-31 days so even if you sign you still have chance to opt out.
I did.
The advisers face was a picture when I return and told him I would like to cancel all of the policies he proposed.
You will feel obliged to take out the insurance with your adviser, they will make you feel as if they are your best mate and really looking out for you. LIES they would just like your money to line there pockets.
You can look and research your own to get them cheaper and more tailored around your needs.
Why didn't you go for the other insurances?
Well, take the loss of earnings, this will payout if you are off sick for more than 6 months then this will payout. Most employers have a 6 month full and 6 month half salary payout for sick. If you are off for more than 6 months, surely the illness will be covered within the life and critical illness cover!
Insurance tip
You ca get separate insurances, for example buildings and contents or life and critical illness. You can also get them combined, life and critical illness and also buildings and contents. By joining them together you will save money. But not always. I managed to take out 2 separate life and critical illness insurance policies on myself and my partner for cheaper than a joint policy. If I am being honest I am not too sure how but it saved £4 a month.
Take the time and get a joint and individual quote, you never know when you may save.
Also see if you can pay the policy in full per year, some policies allow you to do this and this will save you one to two months on your insurance. All you have to do then is repay the amount back into a separate account and then you have it ready for the following year.
Life insurance tips
Okay, you have a joint life insurance policy and one of you get a illness covered by your policy, you get a payout. But what happens if the other person gets a covered illness. Most insurances will not cover two payouts. Therefore look for separate, some policies also payout for children.
When it comes to how much you are worth why go more than the borrowed amount on the mortgage? anything over will mean you may be paying for nothing each month.
Check the policies return percentage and the amount of critical illnesses that are covered. The more in both the better potential should anything bad happen.
Building and contents tips
Check the price you are insured up to. When I was searching there was an automatic insurance of £20,000 for the entire contents. Lower this and this will reduce your payments again.
Check whether you have to itemize certain objects that are above the usual £1000 threshold, if its a £1000 TV realistically that TV is no longer worth that amount after the 12 month warranty runs out. All of the extra amounts you add here will add on your monthly payment.
Some buildings and contents look after the garden as well. Make sure the insured amount is in proportion to what you have in your garden. I would of though £1500 would cover most standard houses.
I hope this help.
The more insurances you take out the more money the adviser will make.
A typical insurance will make the adviser around £400.
When we first sat with our adviser he gave us insurances for building, contents, loss of earning, life, sickness and redundancy this totaled up to around £2000 which would sit quite nicely in hit back pocket, but around £200 a month coming out of ours.
By law you do have to have life insurance cover however I am not too sure with regards to building and contents.
After carefully shopping around and reading the small prints we pay around £50 for all of the insurances (life, critical illness, buildings & contents).
You have a cooling off period for all insurances, this is usually 28-31 days so even if you sign you still have chance to opt out.
I did.
The advisers face was a picture when I return and told him I would like to cancel all of the policies he proposed.
You will feel obliged to take out the insurance with your adviser, they will make you feel as if they are your best mate and really looking out for you. LIES they would just like your money to line there pockets.
You can look and research your own to get them cheaper and more tailored around your needs.
Why didn't you go for the other insurances?
Well, take the loss of earnings, this will payout if you are off sick for more than 6 months then this will payout. Most employers have a 6 month full and 6 month half salary payout for sick. If you are off for more than 6 months, surely the illness will be covered within the life and critical illness cover!
Insurance tip
You ca get separate insurances, for example buildings and contents or life and critical illness. You can also get them combined, life and critical illness and also buildings and contents. By joining them together you will save money. But not always. I managed to take out 2 separate life and critical illness insurance policies on myself and my partner for cheaper than a joint policy. If I am being honest I am not too sure how but it saved £4 a month.
Take the time and get a joint and individual quote, you never know when you may save.
Also see if you can pay the policy in full per year, some policies allow you to do this and this will save you one to two months on your insurance. All you have to do then is repay the amount back into a separate account and then you have it ready for the following year.
Life insurance tips
Okay, you have a joint life insurance policy and one of you get a illness covered by your policy, you get a payout. But what happens if the other person gets a covered illness. Most insurances will not cover two payouts. Therefore look for separate, some policies also payout for children.
When it comes to how much you are worth why go more than the borrowed amount on the mortgage? anything over will mean you may be paying for nothing each month.
Check the policies return percentage and the amount of critical illnesses that are covered. The more in both the better potential should anything bad happen.
Building and contents tips
Check the price you are insured up to. When I was searching there was an automatic insurance of £20,000 for the entire contents. Lower this and this will reduce your payments again.
Check whether you have to itemize certain objects that are above the usual £1000 threshold, if its a £1000 TV realistically that TV is no longer worth that amount after the 12 month warranty runs out. All of the extra amounts you add here will add on your monthly payment.
Some buildings and contents look after the garden as well. Make sure the insured amount is in proportion to what you have in your garden. I would of though £1500 would cover most standard houses.
I hope this help.
Saving Money Online
What I found useful
Many people wonder whether if these so called money saving sites actually work. Well, what I intend to achieve is to list the most efficient, and ones which I generally use.
If its for a first date, treating you parents or friends or even your work colleagues, its not about being 'tight', its about saving you money. At the end of the day, I prefer to have the money in my pocket rather in another persons. So there is nothing wrong with pulling out a voucher, or using a voucher code online.
Ok, so here is a list which I genuinely use:
Money Saving Expert
This guy is FANTASTIC. He has all of the links to need to save money. The tips range from simple saving offers to details on how you can reclaim thousands of pounds. You simply click on one of the sub headings and away you go. Each week, if you opt to sign up, which I recommend the website emails you with the weekly deals. If you're quick you will get some amazing deals. The deals can be for shopping but I have also managed to get FREE cavity wall installation, so what? I wasn't even with the energy company that supplied it! Another whopping saving, perfect for when you are a first time buyer, as I was.
I am a huge fan when it comes to Christmas, however I and alot of people cannot enjoy it as were mostly rushing around trying to buy presents. Well, since I discovered this website I can get most of my Christmas shopping as and when the deals become available. For example, Body shop already had a 25% off sale on the majority of there range, I then received an email stating I could get another 50% off on top of this 25%. I made an absolute killer of a saving, and now most of the ladies within my family are all sorted. And do you know the best thing? the best thing is I hardly have to worry about that maxed out January credit card.
www.moneysavingexpert.com
Voucher Codes
Do you need to buy ANYTHING? holiday, fridge, tent, DVDs, anything?
Well, it really is simple. www.vouchercodes.co.uk click the website, in the big search bar, simply search for the companies name and scroll through the offers. Okay, sometimes the offers will be slim, I managed to get an IPod Touch, 4th Generation 32GB for the same price as the 16GB just my catching the right deal at the right time.
Once you have selected the voucher code, the company you've chosen usually appears on your search bar. This is how the voucher sites make their money. Either a code for online use appears, or you get a voucher to show at the checkout.
BE AWARE certain restaurants will ask to see the voucher before you order, this can make the discount void if you only show it at the end when you have the bill. Simply check the terms and conditions.
Money Supermarket
This is one of the most popular sites used online, however not by myself unless I intend to save money on my insurances. The format is again simple and quite similar to that of www.moneysavingexpert.com. Simply click on what you would like, say travel insurance and follow the link. When you are looking for insurance saving you must be aware of all of the terms and conditions.
Something I encountered when using the price comparison website, all sites gave different final quotes, and some with different companies. So make sure you do a quote from each site (see the list below).
www.gocompare.com
www.moneysupermarker.com
www.comparethemarket.com
All of the sites above use the same format. It may be a long winded approach but if it saves you money - its better in your pocket than in theirs!
I hope you have found the blog useful.
Many people wonder whether if these so called money saving sites actually work. Well, what I intend to achieve is to list the most efficient, and ones which I generally use.
If its for a first date, treating you parents or friends or even your work colleagues, its not about being 'tight', its about saving you money. At the end of the day, I prefer to have the money in my pocket rather in another persons. So there is nothing wrong with pulling out a voucher, or using a voucher code online.
Ok, so here is a list which I genuinely use:
Money Saving Expert
This guy is FANTASTIC. He has all of the links to need to save money. The tips range from simple saving offers to details on how you can reclaim thousands of pounds. You simply click on one of the sub headings and away you go. Each week, if you opt to sign up, which I recommend the website emails you with the weekly deals. If you're quick you will get some amazing deals. The deals can be for shopping but I have also managed to get FREE cavity wall installation, so what? I wasn't even with the energy company that supplied it! Another whopping saving, perfect for when you are a first time buyer, as I was.
I am a huge fan when it comes to Christmas, however I and alot of people cannot enjoy it as were mostly rushing around trying to buy presents. Well, since I discovered this website I can get most of my Christmas shopping as and when the deals become available. For example, Body shop already had a 25% off sale on the majority of there range, I then received an email stating I could get another 50% off on top of this 25%. I made an absolute killer of a saving, and now most of the ladies within my family are all sorted. And do you know the best thing? the best thing is I hardly have to worry about that maxed out January credit card.
www.moneysavingexpert.com
Voucher Codes
Do you need to buy ANYTHING? holiday, fridge, tent, DVDs, anything?
Well, it really is simple. www.vouchercodes.co.uk click the website, in the big search bar, simply search for the companies name and scroll through the offers. Okay, sometimes the offers will be slim, I managed to get an IPod Touch, 4th Generation 32GB for the same price as the 16GB just my catching the right deal at the right time.
Once you have selected the voucher code, the company you've chosen usually appears on your search bar. This is how the voucher sites make their money. Either a code for online use appears, or you get a voucher to show at the checkout.
BE AWARE certain restaurants will ask to see the voucher before you order, this can make the discount void if you only show it at the end when you have the bill. Simply check the terms and conditions.
Money Supermarket
This is one of the most popular sites used online, however not by myself unless I intend to save money on my insurances. The format is again simple and quite similar to that of www.moneysavingexpert.com. Simply click on what you would like, say travel insurance and follow the link. When you are looking for insurance saving you must be aware of all of the terms and conditions.
Something I encountered when using the price comparison website, all sites gave different final quotes, and some with different companies. So make sure you do a quote from each site (see the list below).
www.gocompare.com
www.moneysupermarker.com
www.comparethemarket.com
All of the sites above use the same format. It may be a long winded approach but if it saves you money - its better in your pocket than in theirs!
I hope you have found the blog useful.
Subscribe to:
Posts (Atom)
