If you have never taken out a mortgage before, this blog is aimed at giving you a balanced and informed view of your options and the mortgage market today by examining things you need to consider when you are buying for the first time.
Since last April, the rules surrounding lending have changed, now lenders are required to carry out far reaching audits into personal finances to determine your monthly income and prevent financial over commitment. You will need to demonstrate that you are:
- Saving monthly
- Reducing outgoings
- Reducing debt or
- Debt free
- Receiving a regular income
- In possession of a clean credit rating
- You will need to calculate the total amount you will need for a mortgage deposit and plan your savings accordingly.
- It might be worth finding out if the seller is willing to do a private deal, thus cutting out the estate agent.
- Watch out for extortionate service charges if you are buying a flat, these can significantly add to the cost of your monthly payments.
- It might be cheaper to see if you can bid for a property at auction instead of buying it through an estate agent.
The Government has helped first time buyers and families moving up the property ladder with a landmark schemes in the past five years, the Help to Buy Scheme.
- Help to Buy: Sky rocketing average house prices have placed home ownership in the last five years out of the reach of countless first time buyers and made it difficult for growing families to move up the property ladder. The Help to Buy Scheme has provided loans of up to 20 percent of the overall value of properties in order to help buyers afford the deposit. Now prospective buyers have to put down just five percent of the overall value of a new home.
- Look at the street you are buying in, if the house your are purchasing is far more expensive than the others in that post code, remember that the area will have its own ‘ceiling price’ based on what people in general are willing to pay in order to live there.
- Is the area ‘up and coming?’
- Are there decent schools?
- Is it connected to good transport links?
- What are the amenities like?
There will be a number of compulsory costs included in the mortgage deal:
- Legal Fees (these may be included in the overall price of the mortgage, so you don’t have to pay them outright but over the life of the mortgage they will be expensive).
- Stamp duty.
- Surveys on your new home (scrimp on these at your peril).
You might want to:
- Find a cheaper solicitor than the one your lender is using.
- Find out all the costs and ‘extras’ both estate agents and conveyancing solicitors are charging
- Make sure everyone you are dealing with is covered by a professional charter or body and is insured.
- Make sure your solicitor works for you, not the other way round.
You will also need to ask some searching questions to protect yourself against future heartache when you view a property for the first time, even if you’ve convinced yourself that ‘it’s the one’:
- How long has it been on the market?
- How many offers has it had?
- What are the neighbours like?
- Have there been any disputes?
- Is there up to date paperwork for the gas and electricity?
- Is there up to date paperwork for the boiler?
- What is the availability of parking spaces?
- What is the cost of council tax?
- What furnishings or fixtures come with the house?
- Has there been any history of subsidence or dry rot?
- Is there anything hideous about to be built on your doorstep?
Getting clear answers to these questions will save you much misery later on. You might also want to:
- Find out about the estate agent; are they famed for good customer service?
- Find out about the management service (if you are buying a flat) do they have a good reputation?
You need to have a good relationship with your sellers;
- If you see a property you really want, get them to take it off the market as a condition of your offer. There is nothing worse than being gazumped by another bidder.
Setting up home
You will need to factor in the costs of;
- Removals (get plenty of quotes for this as prices can vary widely).
- New furnishings, kitchen or bathroom.
- Improving the exterior of the building and the garden
Make sure also that you have quotes from workmen for the renovations before you buy, because afterwards the jobs you need doing could become more expensive, the more desperate they sense you are.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE