Whether you are investing in a new build property for the purpose of selling, renting to a tenant, renting as a vacation home or even living in it yourself, there are a number of different financial factors involved. From the most important line of credit – the mortgage or home loan – to other finances used such as credit cards or loans used to pay for furnishing or decorating the home, you can expect to both borrow and spend quite a bit if you’re looking to make a good investment. We’ve put together a list of the different types of finances or credit lines you can expect to be involved in investing in a new build home.
Unless you have a large sum of money available and are able to buy a home outright, it’s very likely that you will need to apply for a mortgage. Usually, you will apply for a mortgage through the bank which you use, although you can go to any UK bank if you find one with better rates. When applying for a mortgage, you will be expected to have a good credit history and be able to show proof of employment and income over the last few years. You’ll also be required to calculate your incomings and outgoings to ensure you’ll be able to afford the mortgage repayments, along with put down a deposit, which is usually a percentage of the full amount. Applying for a mortgage can be a lengthy and complicated process, which you might need a financial advisor to help with. If you are buying a new build home through a scheme such as the Help to Buy Scheme, the process may be a little different.
If you’re looking to make improvements to your new build home once it’s bought, you’re going to need money for that as well. But, if you’ve spent all of your savings on the deposit for the mortgage, getting the cash together to start decorating and furnishing your home could take some time. This is why many home buyers like to take out a personal loan to provide quick funds to make their new house a home. There are many types of personal loan available, including home improvement loans.
Taking out a credit card can provide you with a fund to help get your home set up, or you could even use it as an emergency fund to use if anything were to go wrong with the property. With a credit card, you are able to keep it stowed away until you need it, and there’s no need to pay anything out unless you’ve made a purchase on the card. If you have a good credit rating and a good history with your bank, you may also be offered a credit card when you apply for your mortgage. Take advantage of any low interest deals which you may be able to get.
Which financial factors were involved when you bought a home?