The up and down prices in the UK housing market have meant that many young people trying to take their first step onto the property ladder are simply finding themselves priced out of the market. The average house price in the UK has been wavering above and below £200,000 in recent years.
Lenders are usually prepared to lend a buyer not much more than three times his or her annual earnings, which can make getting on the property ladder quite difficult. Being a first time buyer can be stressful enough, and it’s not made much easier for less experienced clients when they are trying to get their heads around the ‘buying a house’ process, as they often initially refer to it.
At Mary Monson Solicitors, we understand that buying your first property can be an overwhelming experience. We are here to assist you at every step of the way. Some of our lawyers are new to the housing market themselves, so it’s not too hard for us to remember what it felt like when we started out with our first property.
We understand that you want to speak to us for reassurance and advice throughout your transaction. After all, you have not been through this experience before, and might have questions for us.
We do not expect you to know all the answers. We would always encourage you to ask the question that may to you seem silly. We go by the phrase €œthe only silly question is the one you don’t ask€. Our view is that it is for you, our clients, that our firm exists. Not for our lawyers!
The aim of this site is to provide you with some initial advice to set you on the right track in your hunt for the right property. Here are our ten golden tips.
To rent or to buy, that is the question€¦
So you have lived at home for long enough and you’re ready to move. To begin with you need to decide whether you wish to buy a house or rent. You need to begin by considering which the right option is for you.
A good place to start is by drawing yourself up a list of advantages and disadvantages of each option. Here are a few to get you started:
A) You are investing your money into a property. Assuming the property increases in value during your ownership, and that you pay off the mortgage/loan that you have on the property over time, you will be left with equity in your property (Equity is how much the property is worth less any mortgage amount left over).
B) The property is your own and you can give it your own style, changing or adding to it.
A) If the house price falls or fails to increase and you take further borrowings out on the property (like a second mortgage) you may find yourself in negative equity. This means that there will be more owed in mortgages than the house is worth.
B) You will have to pay for repairs to the property yourself.
C) You will be less mobile than if you were renting. If you decide you wish to move you will of course need to sell your property first, and this can take time. The ‘buying a house‘ process is not as straightforward and simple as finding a place to rent.
A) If you intend moving in with a friend/partner, this is perhaps a good way to test whether you are able to live together without the permanency of investing money into a property together. With a rental you will each have the freedom to walk away at the end of the tenancy.
B) The initial costs are lower. You will not need to carry out valuations/surveys, pay legal fees.
C) The property may already be furnished, again saving you an initial expense.
A) The money you are paying to your landlord may be seen as €œdead money€ as you are not investing it in the property as you would if you were buying.
B) You will not have the same freedom to alter the property to suit your taste.
C) You may need the landlord’s permission to move a partner / pet into the property.
Ensure that you are realistic
Most mortgage providers will lend around 3 times your annual salary. You must therefore bear this in mind when you start your search.
We would recommend that you visit a few lenders’ websites and try their online mortgage calculators before you begin your search so that you can fix your budget. There’s no point starting the ‘buying a house‘ process until you’ve got a clear idea of your funding situation.
A few lenders will offer you more money than others; however you must also consider whether you will be able to meet the repayments.
There are many different lenders and mortgage products on the market. Don’t think that because your parents have always used a particular mortgage company that this will be the best decision for you. Shop around.
Location and Type of Property (apartment/house)
So, you know how much you can borrow and your quest to find the right property begins. Where do you start looking?
A good place to begin is by considering what area(s) you would like to live in. It may be that the type of property you want, when based in a particular area, places that property outside your budget. You may therefore have to consider what is more important to you the type of property that you buy or the area where it is.
You may also need to think about local transport and how long the journey to to work takes. How close do you want to be to your family and friends? What about the local shops etc.?
Write a list of things that you require from a local area and property. Order your requirements according to which things are most important to you, and then let the search begin. Getting these early stages right before you actually start the ‘buying a house‘ process will probably save you time and disappointment later on.
Have you considered a new build property? Many house builders now offer incentives for first time buyers for example, some will pay a 5% deposit for you on a property. Many developers also include added extras such as carpets and curtains.
Play to your strengths
As a first time buyer you must remember that you are in a favourable position. You are an ideal customer to a seller or sales agent, and here’s why:
- As a First Time Buyer, you are not in a chain (that is you are not part of a long line of people all dependant on each other’s sale in a chain to proceed). Many sellers will be willing to consider a lower sensible offer from a first time buyer rather than run the risk of waiting for the asking price from a buyer in a chain and the chain collapsing at a later date.
- Be clever in making your offer. Try to find out how long the property has been on the market. If the property has been on the market for a significant period of time, the seller may be more willing to revise their expectations.
- Explain to the estate agent/seller showing you the property that you are a first time buyer you may be surprised to find that they become more receptive to your proposals.
- Don’t be afraid to make a low offer. If you offer too little, you can always increase your offer. If you offer too much and the seller accepts, it’s a lot harder to reduce it! As a first time buyer, you are in a strong position, and don’t be afraid to tell the agent that you know this.
Take an experienced home buyer with you
When buying for the first time there will inevitably be questions and things to inspect in a property that will not occur to you when you go to see it the first time. We suggest that you take an existing home owner with you to assist you in pointing
these things out. We are not suggesting here you have to find a property mogul. Some of the best advice on the whole ‘buying a house‘ process you can get is from a parent or a close friend. It doesn’t have to be from Lord Sugar to be useful.
If you are unable to take somebody with you on the first occasion, try and book a second viewing. At the very least, you will need to make a second viewing on your own as, in the excitement of the first viewing, important questions can be forgotten.
Make a list of questions/things to check before your visit if you think you might forget anything.
Ask the right questions
It is also important to consider as a first time buyer what items at a property will be left by the seller on
completion and included in the sale price. Far too many people visit a property and forget to ask the all-important questions about the fixtures and fittings.
Some seller’s may fail to mention that the fitted appliances in the kitchen will be moving with them to their new property. It can be a real pain when you move into the property and find out that the washing machine that you thought was included in the sale has gone.
If you’re not sure ask. Again remember the strong position you are in as a First Time Buyer. It may that the seller is willing to leave certain items in the property if you ask.
Remember to consider the additional expenses
It is particularly important to factor in the additional costs of purchasing your new home when considering whether the property is within you budget.
The current stamp duty threshold stands at £125,000.00. For properties above this threshold, stamp duty is charged at 1% of the property price. So if you find at a property at £125,500, remember that you will have to pay a further £1,255 to cover the stamp duty.
Part of the buying a house process can be the Home Information Pack or HIP. Does the property you are buying have one? If not, you will have to pay for extra searches. The basic property searches will usually set you back around £200.
If you are taking out a mortgage your lender will want you to get a valuation of your new home to check that it is worth the money that they are lending you. The basic search valuation will cost around £150.00.
Have your considered the costs of the legal work? Your solicitor is most likely to want paying at the end of the transaction. Does the quote that your conveyancing solicitor has provided include a detailed breakdown of all the extra fees applicable to your transaction? By obtaining a quick, no obligation quote from our website, you can be sure that you know in advance what the total fee is likely to be.
Do you know what Council Tax band the property falls within? You will be paying this after you move in, maybe for many years.
How much will the removal van charge you? What about the expenses when you are in the property. Consider the cost of things like buildings and contents insurance, mortgage payment protections plans, water/gas/electricity rates, furniture and decorating.
Do your homework
We absolutely believe that it can take some of the stress out of buying a house if you know what to expect.
In particular, you will need to have an idea of how long the process will take. Perhaps you intend spending the next few weeks or months putting some money aside to save your deposit, or maybe you are simply so excited you want to know how quickly you can expect to move in. For further information on what to expect we would suggest that you visit our section on The Conveyancing Process.
Don’t rush the ‘buying a house‘ process can sometimes be fun!
So you have finally moved. You don’t like the colours in the bathroom. You want to change the fireplace. You don’t have to rush.
The whole homebuying process can be a bit of an adventure if you approach it in the right way. But you will have just spent a lot of money getting to the stage of actually moving in, so have a serious think about kicking up your heels and relaxing for a few weeks before redecorating or renovating.
You may also want to think about living in your new home for a few weeks to see how things grow on you as they are before you make big changes.