Hey guys it's sasha buying, a house can be incredibly intimidating and frustrating for many people buying a house will be the largest purchase you will ever make in your life and there is just so much information out there. So much of it is incredibly confusing and some of it doesn't really apply, because the uk is very different to the us and other countries around the world. So i wanted to go and make a very simple video that explains everything all the key things you need to know about buying the house, whether you're buying for the very first time or moving now. First, let me really quickly cover some of the key components you need to be able to get a mortgage.

The first thing, you'll need is a good credit history. It is absolutely key that you understand how this works, because it works completely differently in the uk. So please don't listen to the us advice on this in the uk. There is no such thing as a centralized cover all companies credit score.

Each lender will have their own set of criteria their own way of calculating your credit score. Their own way of assessing your credit history and some providers will accept you, while others will not and that's perfectly okay, that's normal. The key to building a good credit history is to show that you are able to manage credit over time, so you'll need to go and plan in advance. You'll need to go and get yourself a credit card.

You'll need to then go and use a credit card. Every single month and then repay it in full in order to begin reporting data to credit reference agencies, which will then build your credit history, do not ever miss payments because missed payments can be incredibly bad for your credit history. If you do anything like declare bankruptcy, get a county court judgment, get an iva or default or any other similar things you will most likely not be able to get a mortgage for probably at least three years with a vast majority of providers. I'm going to link some videos in the description about building credit and the best ways of doing it so make sure you go and check them out after watching this video.

The next thing might sound incredibly obvious: you need a big enough salary, but big enough here means two different things. First, off you'll need a big enough salary for the amount of money you need to borrow. The amount you will borrow is the total price of the house that you're buying minus your deposit. Legally, lenders are only allowed to lend out up to about 4.5 times your salary or 4.5 times the combination of your salary and your spouse, for example, if you're buying together.

So if you earn 50 000 pounds per year, that'll mean that you can borrow up to 225 000 pounds. If your deposit is 25 000 pounds, then you can buy a house worth a total of 250 000, but lenders are allowed to lend a small number of mortgages and multiples above 4.5 times at their discretion. This is a sort of small loophole, so you could technically get mortgages up to five times or 5.5 times even multiple, but you'll need to put down typically a much bigger deposit to get those kind of multiples. You need to have an impeccable credit history, and usually these will be reserved for more expensive properties.

Next up is the affordability check. This sounds incredibly similar to the salary question, but it is a whole different thing. You need to convince the bank that you are able to go and afford the monthly mortgage payments. This can range from relatively straightforward, with some providers to an incredibly mind-numbingly complex process with some others.

Affordability checks are basically a mimic of your monthly budget they're. Trying to understand all your incomings and all the our goings from your household budget to try to understand. Can you actually make those monthly repayments back to them once the mortgage is granted, so they will ask you all about all your other credit commitments, because you have to continue making payments on those they'll. Also ask: how much do you spend on child care? Household bills? Shopping and everything else, this is the reason why they're doing it and they'll want to work out how much you are then earning after tax and do all the sums and what you'll need is you'll need to have more spare money coming in.

After all of these costs, then the amount of the mortgage monthly repayment that you will then have to be making. This is the step where a lot of people fail. Most people kind of get very concerned about their credit scores and credit checks and all the other stuff, but affordability is an incredibly common way to common way to fail, your credit score can be absolutely fine. Your salary can be high enough and you can be in a good job earning a lot of money, but the affordability is where people can often get really stuck now.

The next big thing in buying a house is cash. This is the big one. You need a giant pile of cash to pay for the deposit, stand due to legal fees and everything else stamp duty is on hold currently for properties under 500 000 pounds in the uk, but over the next few months. That is all going to go back to roughly what it was before from october 2021, all properties worth over 125 000 pounds will incur stamp duty and, if you're buying a mansion in cumbria or a tiny shoebox somewhere in london, you might have to pay as much As 10 or even 12 on your property, the media will tell you that if you're a first-time buyer, you can now get 95 mortgages, which means you only need a 5 deposit.

How amazing, but the truth is you'll, be paying a much more expensive rate in order to get that, typically for the mortgages that are available at the moment, you're paying something like four to five percent, which is super expensive for a mortgage in the current interest rate Environment, if you have a deposit of 10, that rate drops to half at about 2.4 percent, a 15 deposit gets you much closer to about two percent interest and a 20 deposit can get your rates as low as 1.5, which is incredibly cheap. On a 250 000 pound mortgage over 25 years, the difference between a 1.5 percent rate and a 5 rate is 462 pounds per month in interest, so you're going to be paying considerably more if your deposit is low. So, let's talk about how you actually need to go and save the money for your mortgage deposit, because that is the most difficult bit. First, let's talk about how much you actually need to save, because this is a question that some people underestimate you'll need to add up all the different costs that are due, because they're usually going to be due on completion just before completion or shortly after and the Cost that you need to account for are one the deposit you might need as much as 15 to 20 percent of your purchase price to get those decent mortgage rates.

Two stamp duty check what the amount you are going to have to pay on the gov, the wk website. In case this changes over time uh. Next, you will need to pay legal fees. These do vary and there's a lot of different variables in there, but expect to pay between 1 000 and 2 000 pounds on average, and this will include all your different searches and things like the land registry fee.

Now. The next item is the survey fee. This may not be compulsory and some people choose to not do it, but in the grand scheme of things it's actually not that much money and it is often a good idea. It will give you a detailed report about your property, with a detailed explanation of some of the pros and cons of it from a structural and other perspective, and it can be really eye-opening.

The last one on my list is the upfront mortgage fees. So you can go and have to pay depending on the mortgage and the way you're getting it things like the valuation fee, the booking fee, the arrangement fee and a broker fee, and these can all add up to over a thousand pounds and even over 2 000 Pounds in some cases, so if you want to go and buy, for example, a property worth 250 000 pounds with a 15 deposit you'll be looking at collecting something like 43 000 pounds in cash in total. So that is a lot of money. The key to saving a huge amount of cash is to budget appropriately.

You only have two levers here, so it is actually relatively simple, even though the implementation of this may not be that simple number one you have to manage your expenses cut out all the expensive things that you don't need and save where you can, the energy tariff Or limiting your takeaways or just not spending the kind of money that you use to enclose can all add up and save you many many hundreds of pounds every single year. The other thing which probably most people will discount but can be as potent if not more powerful, is finding ways to earn more money. Do you have a way to earn more in your job by doing more hours or earning more commission? Should you land a better paying job, just be very careful here, because mortgage providers will often not like it if you've only just changed your jobs? Can you start a side hustle where you'll be able to earn some additional income? The next bit you'll have to consider is investing your money. It'll, probably take a few years to save the cash you need to buy a house, it's a lot of money and a lot of money for most people.

So you don't want your money sitting there in cash or in a savings account earning you approximately zero point, nothing percent interest. You can go and invest your money in the market to get an average return of about eight percent relatively passively by investing in something like the s p, 500, without really having to do any active management of your portfolio or choosing specific companies. And if you're a first time, buyer and wanting to buy in more than 12 months time, you can also set up something called a lifetime. Isa account.

This allows you to deposit up to 4 000 pounds per financial year into one of these accounts and get a 25 bonus from the government. So if you deposit the maximum in three different financial years, you'll get three 000 pounds for your deposit from the government from hmrc before any further growth, which is a really neat way of getting that extra. Little bit of cash check out the video i have, which i'm going to put link up up here in the description below where i explain exactly what lifetime is, are and exactly how they work. As you get closer to the point at which you will want to buy, you might want to take a few precautions if your money is invested right up to the point of buying, a market crash can suddenly wipe 30 to 40 percent of your deposit in a Day and the fact is that these crashes do recover over time, but if you're due to complete next week, you might not have that time to wait.

So, as you approach the point at which you're buying and you're saying a few months out, you might want to go and begin pulling the money out of investing and begin keeping it as cash, even if it's not financially prudent on average to do so. That way, the money is liquid, you're able to go and send it to your solicitor at a moment's notice, and you have no risk of that money declining in value. I hope you guys found this useful if you have please go and hit the like button for the algorithm so that more people can watch this video. Thank you so much for watching and as always i'll see you guys later, you.