So you’ve decided to buy a property in Oxford? Great plan! It’s a stunning city, steeped in history and bursting with excellent property options. Whether you’ve already started house-hunting or you are just starting to get an idea of what you might be able to buy in the future, it’s vital that you have an accurate idea of how you will afford to buy a property.
Start with a deposit
First of all let’s look at deposits. Do you have a healthy sum saved up? Are you in the fortunate position of being gifted a lump sum from a family member? Whatever your circumstances, make sure you know exactly how much you have lined up for a deposit and don’t forget to allow for Stamp Duty, solicitors fees and moving costs!
You’ll need a mortgage for the balance
In addition to your deposit, you will most likely be needing a mortgage. This will be a large sum that you borrow from a bank or mortgage lender and pay back (plus interest) over several years. It is likely to be the largest amount you will ever borrow so make sure that you understand all the terminology etc and you do lots of research.
If you’re buying a property in Oxford, you will need to assume that you will need at least a 5% deposit. Oxford is not cheap! The average property price in Oxford is around £595k so you’re going to need a deposit of at least £29,750k. You’ll also need to be able to prove that you have a steady income either through employment or at least two years of self-employment. And finally, lenders will need to see a healthy credit record.
How much can you afford to borrow?
So how can you find out how much you can afford to borrow for your Oxford property purchase? A good place to start is with a reputable mortgage advisor. It shouldn’t cost you anything to have a chat, explain your circumstances and ask them to apply for a Decision in Principle on your behalf.
Your mortgage advisor will be looking at your income and any monthly commitments (credit cards, personal loads, car finance etc). They will also be taking into consideration your ‘Loan to Value’ (This is the percentage of the purchase price that you are looking to borrow) as well as your credit history.
A good mortgage advisor in Oxford will also be willing to take some time to get to know you and really understand the needs of you and your family. Buying a property in Oxford is going to be expensive to you need someone who is going to go above and beyond to get you the best possible mortgage deal.
Of course, you can also have a look at some online mortgage calculators. Every lender will have one on their website and they can be a useful starting point. Be as accurate as possible but remember, every lender looks at your figures differently and without the inside knowledge that a mortgage broker has, you may not know how to get the best out of your individual figure.
What is a “Decision in Principle”?
A Decision in Principle (sometimes called an Agreement in Principle or a Mortgage in Principle) is an indicator from a specific lender that, in principle, given your income, deposit and a soft credit check, they will lend you x amount of money. It isn’t the same as an actual mortgage offer but it is a strong indication that the bank is prepared to lend to you and it’s very useful to give you an idea of how much you can borrow (Estate Agents are also going to be keen to see it when you come to make an offer on a property).
As easy as 1,2,3!
So to summarise what we’ve learned here. If you’re looking to source a mortgage for your Oxford property purchase our top tips are
- Save a healthy deposit
- Seek advice from a professional mortgage advisor!
- Get yourself a ‘Decision in Principle’ so that you can go to view properties armed with a good grasp of the figures and what you can afford.
Happy Oxford house hunting!!
And if there’s anything we can help with do give us a call on 0330 122 9920, we’re an independent mortgage brokerage offering 5 star mortgage advice across the South West UK (and beyond!) so do get in touch!