The top 10 property mistakes
Whether you're buying a property or thinking about selling one, make sure you don't fall foul of these 10 expensive mistakes...
When I bought my flat and was first given the keys, I couldn't wait to step inside my brand new home. Unfortunately, when I stepped inside the door, my excitement quickly turned to tears. And no, they weren't tears of joy.
The flat I had initially loved had rapidly transformed into a hell hole. Alongside the fact that the flat had clearly never been cleaned, I found a whacking great hole in the bedroom wall through which the previous owners had poked a wire to connect their freezer (which was on the balcony) to the power supply. And that was only the start of it.
Of course, you could argue that I should have spotted all these faults before I signed on the dotted line, but hey, that's what you get with experience, right?
But that brings me to what this article is all about. Property mistakes. So here are 10 of the worst mistakes you can make - whether you're buying or selling your home:
Buying a new home
If you're buying a new home, these are the key mistakes to avoid:
1) Getting too many mortgage quotes
Here at lovemoney.com, we're always telling you to shop around for financial products. And while this is a great way to ensure you're getting the best deal, unfortunately, if you're not careful, it could actually do more harm than good.
When you're shopping around for a mortgage, you'll need to request a decision in principle from the lender. And as part of this, you may find the lender decides to run a full credit check. Each time this is carried out, it leaves a footprint on your credit report.
So if you go to more than one lender, you'll find you suddenly have a number of footprints on your credit record, and this could mean you get turned down for credit in the future.
To avoid this, make sure you don't apply for too many deals. And if you want to keep an eye on your credit report, you can check it for free with Experian.
You can read more about this in The secret ways banks are damaging your credit rating.
2) Fixing your mortgage for too long
Many of us like stability, and therefore knowing that your mortgage payments will stay the same each month can be reassuring. As a result, it can be very tempting to fix your mortgage for a number of years.
However, you should be wary of fixing for too long. And that's because you simply don't know how your personal circumstances might change during that period - particularly if you're fixing for as long as 10 years.
Luckily, if you end up having to move home, most long-term fixed rate deals are portable - so you can move your current mortgage over to your new property. But you may find it expensive to increase the size of your mortgage, if you're looking to buy a more expensive property. And if you get divorced or you lose your job, you may not be able to afford the mortgage anymore, and yet if you want to pay it off you will be hit by expensive early repayment charges.
3) Believing your estate agent
If you've put in an offer on a property that's below the asking price, watch out for the great estate agent spiel.
It goes something like this:
'I should warn you that there's another couple looking around the property tonight who are very keen on buying and are likely to pay the full asking price. However, if you're prepared to raise your offer to match it, I can guarantee the property will be yours.'
The estate agent is, of course, most likely to be preying on your fears of losing the property. And, if you're as gullible as I am, you'll probably fall for it. But don't! Stick to your guns (and your original offer) and keep those fingers crossed! There's a good chance your estate agent is fobbing you off with a load of rubbish!
4) Buying when the market is at its peak
If you were one of the unlucky ones who bought a property in the summer of 2007, you'll know exactly what I mean. Buying a property when prices are high is never a great idea - not unless you want to watch your property value tumble soon after.
5) Not budgeting for the hidden costs
Unfortunately, as well as paying for the property itself, there are a whole host of other costs you'll need to budget for. These include solicitor's fees, stamp duty, valuation fees, and so on. You can find out more about these in The never-ending costs of buying your first home.
Selling a property
If you're already a homeowner, but are hoping to sell up in the not too distant future, avoid these five mistakes at all costs:
6) Letting the lease fall below 80 years
The value of a leasehold property is affected by the number of years the lease has left to run. So as the length of the lease reduces, the underlying value of the property declines.
And unfortunately, if you wait until you have less than 80 years on the lease, buying an extension becomes more expensive. That's because you will have to pay what's known as the marriage value. This is calculated by deducting the value of the property before the lease extension from the value of the property afterwards, plus the value of the landlord's interest in the property.
If the lease has 80 years or more to go, you only have to pay the landlord's interest - which is not linked to value of the property, but to much smaller sums like the ground rent.
This means that you can save thousands of pounds by extending your lease before the length falls below 80 years. So if your lease is approaching the 80 year mark, make sure you extend it now. Use the calculator on the Leasehold Advisory Service website to figure out how much you could save.
7) Concreting over the garden
It might be easier to maintain, but getting rid of all the grass around your home, and replacing it with concrete, really won't attract buyers. In fact, how the outside of your property looks can be more important than what's inside. After all, if a prospective buyer is welcomed by an over-run garden, or a slab of concrete, chances are he might not want to step inside.
8) Removing period features
It always saddens me when I see people have carelessly ripped out original features in a property - particularly when they're worth something!
Take my boyfriend's granddad for example - he has some gorgeous original 1930's Art Deco style glass in the doors and windows of his home. They are in great condition and are worth a fair bit. And yet his neighbour has ripped his all out!
But taking the time to restore period features can make the property more desirable. You can find tips on restoring period features here.
9) Smoking indoors
If you're a regular smoker, don't do it in the home. There's nothing more off-putting for a potential buyer than stepping inside a property only to be greeted by yellowing walls and the thick smell of smoke. So make sure you smoke outside, and give the walls a good lick of paint before you put the property on the market.
10) Choosing dark colours
The first thing that went in my flat before I moved in was the horrible dark red carpet that ran throughout the property. It made the rooms look dark and dingy, and believe me, the minute it was ripped up, the whole place looked a million times better.
So if you want to attract buyers (and not stupid ones like me), choose softer, neutral shades instead - this applies to walls too.
Don't forget that if you are selling your home, lovemoney.com can help. First, adopt this goal: Sell your home. Then, watch this video: The estate agent debate. Finally, why not have a wander over to Q&A and ask other lovemoney.com members for advice?
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