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Paid PostAug 22, 2018

These Charts Will Help You Understand 9 Confusing House-Buying Terms

Still think stamp duty is something to do with post? The Halifax Jargon Buster can help you understand even the most convoluted home-buying terms.

1. Nailing what you actually *need* from your house (not just want) can be tricky.

Working out where your priorities lie and establishing what aspects you’re willing to compromise on can help you nail down what you really need rather than what you want. Two bedrooms? A must. A cinema room? Not really a necessity right now.

2. Assessing how much you can afford to spend on a mortgage each month will be tough, but it can help you to avoid ending up in the red later on.

Looking at your bank account and calculating how much you actually spend a month can be scary (yep, you really have been spending £2.75 on your daily coffee), but before you take on a mortgage, you need to make sure you can afford to make the monthly repayments.

Calculate how much expendable income you have post-bills and, you know, life costs, and then assess how much you have free to spend on your new home. The general rule of thumb is to not allow mortgage spending to go over 28% of your gross income.

3. And when you know how much you can spend, you should be able to work out what length of mortgage you could apply for.

Commitment-phobes may find this bit overwhelming, but working out the length of mortgage you want to apply for is a big step to knowing what your monthly financial commitment may look like.

A mortgage term can be from 6 months to 40 years depending on your personal circumstances.

The shorter the mortgage term, the quicker you will pay it off and you will ultimately pay less interest overall. However, your monthly payments will be higher. On the other hand, the longer the term, the lower the monthly payment. However, it will take you longer to pay the balance off, so you will pay more interest overall.

4. Finding the right mortgage for you can be a bit of a faff. A fixed rate mortgage could be a great option for first time homebuyers who want to cushion themselves with some security against fluctuations in interest rates initially.

A fixed rate mortgage means that your interest rate is guaranteed to stay the same for an agreed period, giving you increased certainty around your monthly payment – which is super handy.

After your product rate period, you'll usually be transferred onto your lender's variable rate. Your lender will set and manage the interest rate, which can rise or reduce in line with the Bank of England interest rate changes. This means your monthly payments can go up or down, so some periods may be a bit cheaper or more expensive than others.

5. The general confusion of working out how much stamp duty you will be eligible to pay will keep you awake for at least one night.

Yep, stamp duty is a bit of a minefield, but once you get the concept down (nope, nothing to do with *actual* stamps!), you should have a better understanding of how much to set aside for it.

In 2017, budget and stamp duty changes meant that first time buyers wouldn’t be charged for any properties of up to £300,000. There was also good news for current homeowners looking to move on – you won’t be charged on the first £300,000 on a property up to the price of £500,000.

6. And while you’re at it, you might want to make a list of the other costs associated with buying and budget a little bit more than they should cost.

Buying the actual house is the most expensive part, but there are other associated costs which can stack up as well.

It may sound like a lot, but if you effectively budget and prepare, you won’t stumble across any ~unexpected~ costs. Ask your solicitor upfront about their fees and check with your lender how much your valuation fees will come to so you can tick those off early on.

7. And when you’re in that awkward period between having your offer accepted and completion, you’ll find yourself prioritising doing all the *exciting* things over the boring necessities.

The move-in date will come, and you’ll have all the cutlery you could ever need but no fridge or all the throw cushions you could ever possibly want but nowhere to actually sit.

8. And when you exchange and complete? You’ll feel such a mix of positive emotions that you won’t know what to do next.

Buying a house is a great achievement and one that should be celebrated appropriately: with a takeaway eaten on the floor of your new abode.

9. Never forget: Finding your perfect home can be a mix of emotions, but make sure you’re thinking with both your heart and your head.

Not to scare you, but this is probably one of the biggest investments you’ll ever make, so you’ve got to be sure that your new home will not just be a sound investment but somewhere where you see yourself living and growing for at least a few years to come (before you're ready to do it all over again!).

Getting confused between your leasehold fees and valuation fees? The Halifax Jargon Buster will break down all the house-buying terminology so you can spend more time choosing paint swatches and less time stressing.

Additional imagery from Getty / iStock