Buying your first home is an exciting, yet daunting experience. It is likely that this purchase is the biggest financial commitment you will ever make in your life and the prospect of taking out a loan that will take you about 25 years to repay is something that could keep you awake at night.

However, it is a great time in your life and one that you should thoroughly enjoy.

The first thing to do when you decide to purchase a home is to figure out how much you can afford to spend. This is basically how much money you can afford to borrow, Do your homework by finding the areas in which you want to live and then searching the prices of homes in these neighbourhoods.

At the present time the interest rates are the lowest they have been in quite some time, which means that your mortgage payments will be lower. You do have to keep in mind that once the recession is over, interest rates will start to climb and that will mean higher monthly payments, even if you do lock your mortgage in for a period of time.

Making a budget is an important part of the planning process when buying a home for the first time so that you can see how much money you have to work with each month. This is one essential part of the application process because lenders will scrutinize your finances to make sure you can afford the house you want to buy.

There is more to buying a home than just taking out a mortgage for the purchase price. First of all, lenders will not give you a mortgage for the full purchase price. You will be expected to make a deposit of about 25% percent of that price although there are lenders who have more lenient terms for first time home buyers. However, there are none that will finance 100% of the price.

In addition to coming up with the deposit on the mortgage there are other fees involved. These are called closing costs and include the solicitor’s fee and the administrative fees charged by the lender. You can choose to pay these on your own or have them included into the amount of your mortgage, which will increase the amount of money that you owe and on which you must pay interest.

Then comes the cost of home insurance. In order to sign the final papers and receive the keys to your new home, you must show proof of having home insurance. This is another expense that you may not have thought of or budgeted for. After you move in, depending on where you live, you will also have council tax to pay, water rates, gas and electricity bills and perhaps ground rent. You do have to budget for all these additional expenses.

When you plan to purchase a home for the first time, it is wise to research the lenders to find the one with the best interest rates and arrangement fees. Once you have initial approval for a mortgage, you know the price range in which you can look at houses. When you find one that you like, have someone used to buying homes view it with you. This person may be able to spot a defect that you wouldn’t recognize and save you from having to make costly repairs shortly after you move in.

You do have to make an offer to the seller and this is usually lower than the asking price because you want to save some money wherever you can. If your bid is accepted then you have to start making arrangements with a lender for the final approval of the mortgage. It usually takes about a month from start to finish once you place a bid, have it accepted and be able to move into your new home.

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