Most of us dream of owning our own home one day, and although it may seem far off in the future (with the average first time buyer being over 30) it’s best to start prepping as early as possible for the biggest investment you’ll ever make!
There are many things to consider when looking to buy your first property; it’s not just a case of saving up enough money for the house anymore – there’s a whole lot of strange fees you’ve probably never even heard of!
Here’s our guide to leaping onto the property ladder.
Before you buy…
Currently, you need around 5% of your house price saved up as a deposit in order to get a mortgage.
The average price of a semi-detached house in London is 602,000 – this means if you want to live in the big smoke you’ll have to part with around 30,000 as a deposit!
Otherwise, the average house price in the UK is £196,000, so you’d need a £10,000 deposit to secure a house in an alternative location.
Many studies suggest that 50% of first time buyers get help from parents, but if this isn’t an option for you there are other ways to save.
Moving back in with parents might seem like a step backwards, but all the money you’ll be saving on rent will take you a step closer to owning your own house.
Another idea is to buy with a friend or sibling so that you can split the cost; obviously this only works if you don’t have a family to consider.
The home buying process…
Once you have decided to buy your own home, with a partner, friend or indeed on your own, the actual house buying ball will begin to roll!
The average time it takes to actually get the keys to your new home is 6-10 weeks from the point that your offer is accepted; you’ll have a few things to sort out in the meantime.
Get a mortgage
A mortgage is a loan from the bank that you’ll be paying back monthly – it’s most likely the biggest, and longest loan you’ll ever receive.
You should aim to get a ‘mortgage in principal’ as soon as you start looking for a property to buy; this will show estate agents that you are serious about buying a home and also looks good when making offers on houses. Chances are your offer is more likely to be accepted than someone who doesn’t have one of these yet!
You can contact a mortgage advisor in order to get a mortgage in principal and talk through your options – this is often a free service as mortgage advisers get their fee from a lender for delivering the business to them.
There are different types of mortgages available – the two most common are called ‘fixed rate’ or ‘tracker’.
With a fixed rate mortgage you will agree a rate of interest and this will remain the same for a fixed number of years; this is a good idea if you want your monthly payments to remain the same so that you can budget more easily.
A tracker mortgage means that your interest rate will depend on the rates set by the Bank of England; this means they are liable to change!
Benefits of a tracker mortgage is that they are often cheaper to begin with, however you need to be aware that they can be unpredictable as rates can rise at any time, without warning.
Find out how much you’re eligible to borrow
Due to banks tightening up their borrowing rules after the stock market crash, buyers can no longer borrow up to five times their salary (which used to be the case!)
Nowadays, banks have lots of questions and regulations in place in order to determine how much money a person can actually afford to pay each month.
Questions can include how often you eat out, spend on your food shop or how much yur gym membership is!
Check your credit rating
Having a good credit rating is almost vital when getting a mortgage; the banks want to know you’re reliable and will pay back what you owe to them.
Get a copy of your credit report from one of the main credit reference agencies (Experian, Equifax or Call Credit) and make sure you have no ‘black marks’ i.e. unused credit cards and store cards that will bring your credit rating down, or unpaid credit cards.
It’s also a good idea to join the electoral role database of people eligible to vote.
Find yourself a solicitor
You will need a solicitor in order to transfer the legal ownership of the property into your name.
They also check any insurance claims for important issues such as the foundations of a property; they are therefore an important part of the home buying process.
When hiring a solicitor, be sure to ask their rough costs in advance – and if you can avoid it don’t get an estate agent referred solicitor as they often charge a referral fee.
Fees on average are between £400 and £1,500.
Get your stamp duty cash together
Once you have chosen your dream house, you’ll need to pay stamp duty to your solicitor ‘within 30 days of completion’ (when your property purchase has been signed, sealed and closed!)
Use a stamp duty calculator when looking at houses within your budget.
To give you an idea, on a house worth £200,000 you’ll have to pay £1,500 and that goes up steeply for houses valued above £250,000.
Be Safe not Sorry – Get a Survey Done!
Once you have picked your property, ensure you get a survey done on it in order to check everything is in full working order and it’s safe to live in – there’s nothing worse than moving in to a property and finding out that you need to spend large sums of money on sorting out structural faults!
If the property is old or had work done on it recently, then it is even more important to get a full and complete structural survey done.
Often mortgage providers will organise a survey and it will be combined with the price of the property valuation, so you won’t have to pay any extra.
Final tip checklist:
– Visit the property with someone else – they might see some things that you have missed
– Keep in contact with the solicitor weekly to see if there’s anything you can do to speed to process along
– Build a personal relationship with the person you’re buying the house from- this will help when co-ordinating on moving day!