Buying your first home is an exciting time and is a major milestone in most people’s lives.
It can also be a daunting prospect. There is a lot to think about and organise. Buying a home is one of the biggest financial commitments you will ever make and there is no opportunity to take it back for a refund if you decide you don’t like it.
Below are some of the major areas you need to consider to help guide you through the process.
You can obtain a mortgages for up to 95% of the value of the property but the larger the deposit you can put down, the lower the borrowing rate will generally be. Lenders charge higher interest rates on higher percentage loans because they are at greater risk if you cannot repay the loan. So, in the long run, the more you can save at the beginning the better.
In addition to the deposit you will also need funds to cover the costs involved with buying a home. These include Stamp Duty Land Tax (depending on the purchase price), survey costs, legal costs, the cost of necessary legal searches relating to the property and the cost of moving. You will also probably need a fund to equip the property.
You need to be very sure about how much you can afford to repay on your mortgage every month. It is important not to over commit yourself because after all your hard work you do not want to risk losing your home because you cannot meet the repayments.
Look in detail at your monthly income and outgoings to see what is available. This is probably something you will have analysed before when considering how much you could afford to save towards the purchase.
It is important that you factor in your likely out goings after the move. For instance, if you are moving into a larger property your utility bills and Council Tax may be higher and you will need to take out buildings insurance.
Spend some time becoming familiar with the types of mortgage loans that are available. You need to know the difference between an interest only and a repayment loan, a variable rate, a fixed rate and a capped rate. Some loans have special offers such as a low rate for a period of time or no arrangement fees to be paid. Be sure you know what you are committing to. You need to know how much the repayments will be immediately and how much they are likely to be in the future.
If your budget and savings are insufficient you may have to think creatively to get a foot on the property ladder.
You could consider buying a property with friends or relatives. Alternatively you could follow a more commercial approach and buy with a housing association where you own a percentage of the property and rent the rest. There is also government assistance available through several Help to Buy schemes, such as special ISA savings plans, equity loans and shared ownership deals.
When you apply for a mortgage the loan company will run a credit check. The better your rating the more likely they are to offer you a loan. A few months before you wish to apply for a mortgage loan you should check your rating. If there are any errors apply to have these removed.
One method of improving your rating is to buy everything on a credit card and then pay the credit card off in full at the end of each month. This shows the credit rating company that you are able to cope with debt
Another important factor is to have a permanent and stable address. Without this lenders may not be prepared to lend to you as a precaution against fraud. So make sure you are registered to vote (on the electoral roll) at your current address as soon as possible.
Once you have saved a sufficient fund to cover the deposit and the various costs associated with the purchase you should apply for a mortgage agreement in principle. This is a letter or certificate from a lender to show that they are willing to provide you with a mortgage loan up to a specific sum. You can use this to reassure sellers and estate agents that you are serious and that you will have the money to complete the purchase.
It is best to select your potential mortgage carefully, reading the small print, and then make one application at a time. Avoid making multiple applications to multiple lenders. Each application leaves a record on your credit report that will be seen by other lenders. Not only does this harm your credit rating it might also put a lender off because you may look desperate to secure a loan or may be an indication that fraud is being committed.
With your finances in order you can begin to search for a property.
You probably know the type of property you are looking for but it is a good idea to write down a list of the key features and mark them as must haves and would be nice to haves. This will help to focus your mind when it comes to comparing different properties.
Searching online can quickly display a multitude of properties. Narrow your search using the tools available to select the price range, number of bedrooms, house type etc. You can further refine your search by picking out key features such as garage or parking. You can also use map searches to work out travel times from the property to key locations, like your place of work, and to see what amenities are available in the local area.
Whilst online searches are simple and instant, don’t forget to visit local estate agents in the area you would like to live in. If you are friendly, show a keen interest and are clear about what you are looking for, agents may notify you the moment they are instructed on a suitable property. This approach could put you ahead of the game before the property details have been posted online.
View several properties, even if the first one seems to be right. Looking at other properties might highlight an issue you had not thought of.
Have a checklist of things to look at to make sure you do not miss anything. Take notes and pictures so that you can compare properties later. It is very easy to mix up features and facts between properties when you are viewing several.
Ask direct questions. The agent is under an obligation to answer them honestly. If they are evasive ask them to raise the question with the seller.
When you have narrowed down your list it is a good idea to revisit the property location at different times and days to see if it is busier and noisier at other times. An agent’s job is to sell the property and they may have carefully selected your viewing slot.
Once you have found the home you wish to buy, you need to decide how much you wish to pay for it and then negotiate to get the best price. Try to find properties similar to your final selection for sale and compare the prices. This will give you a good starting point but you will need to factor in unique factors that might make a difference to the price.
Having found the property you have been looking for you will not want to risk losing it but as a first time buyer you are in a good position to negotiate. You have no property to sell, which is a real benefit to the seller.
Once your offer is accepted you need to make sure the purchase process is professional undertaken. You will need a surveyor and a solicitor, the first to check that the property you are buying is structurally sound and in good repair (basically that it is worth the money you are paying for it) and the latter to carry out necessary searches against the property and to complete the legal purchase process.
Having committed so much time, effort and money to buying your home it is worth making sure you are dealing with professionals that can not only do the job but have good client care and keep you informed of progress as it happens.
If you would like further information or advice please contact Anthony, Natalie, Karen, Amy or Michelle on 01752 668246 or send an email by clicking here. Alternatively you can obtain an online conveyancing quote by clicking on the button at the top of the page.