5 Things A First Time Buyer Should Know
If you're keen to buy a property either now or in the future, don't fall foul of these common mistakes.
Although things have never been particularly easy for first time buyers, it seems that things are currently about as bad as they've ever been. Property prices (and mortgage payments) are soaring and with the average house costing around £200k, many first time buyers need to have a couple of fairly hefty salaries, or a serious amount of cash in the bank to be able to buy.
But if you're the sort that is determined to own their own home, no matter how long it takes, you'll need to be on your toes. That means reading up, knowing your stuff and not falling foul of many of the common mistakes made by rookie house hunters. So check out these tips, and get prepared.
The most crucial part of the home-buying process is to understand the costs involved. Unfortunately, many first time buyers believe a deposit is enough to secure their first home when they find it. However, this is just the beginning -- add on stamp duty, survey costs, solicitor fees and land searches and you could easily need the same again!
A house costing £150,000 will rack up a stamp duty cost of £1,500. Add on your solicitor's fee, homebuyer's report and searches and you could increase this by something in the region of £2k to £4k. Slap this onto your 5% deposit and you could need a hefty £13k in your savings account to buy that home. You'll also need to make sure you're not over-stretching yourself with your monthly mortgage payments. It's therefore essential to have done your sums, and spoken to a mortgage lender or broker about how much you can borrow before putting an offer in.
2. Location, location, location..
Once your finances are on track, it's time to start looking for that home. And although you may fall in love with the first one you view, try to be objective, especially regarding its location. The Americans have a good phrase for house buying, something along the lines of that it's "better to buy the worst house on the best street than the best house on the worst one". Take your time to get to know the area, and view the roads you like at different times of day to suss out the traffic/noise/parking problems etc.
We're all different and as such, some of us do funny things to our homes. However, while you may be able to live with the fact the house you love has bizarrely had its garage door bricked-up, or that you have to walk through the master bedroom to get to the bathroom, will potential buyers in the future? Ask yourself "how easy will it be for me to sell this property in the future?"
4. Know your terminology
A recent survey by AA Legal Services revealed that 40% of first time buyers have no idea of the difference between a freehold and leasehold -- a bit of an oversight, particularly if they're planning to buy a flat. Again, spend a bit of time learning the terminology -- it could save you time and money in the long run.
5. Making an Offer
Once you've found that dream pad, it's time to put an offer in. But don't immediately offer the asking price (or more!). By now you should have been watching the market like a hawk and know how much equivalent properties are on the market for, and how much the place you like is worth. Now it's time to negotiate.
Check sites such as Nethouseprices to find out how much similar houses have sold for in the area. Speak to the estate agent to find out how long the property has been on the market -- if it's been a few weeks in a fast moving market it probably means it's been overpriced, while if it's just come on and a horde of others are about to view it may be prudent to make an offer quickly. And crucially, ask if any other offers have been made (and rejected). Remember, as a first time buyer you have no property to sell (i.e. no chain) and so should be in demand by sellers. Use this to your advantage if you can!