Thursday, 26 January 2017

HOUSE TO HOME | TIPS FOR FIRST TIME BUYERS, WHAT TO EXPECT & MY STORY | PART 1

It's been almost a year now since I got the keys to my first home and so I thought why not share some little nuggets of information that I have picked up along the way in the hope it may help some of you out. I have decided to split these posts up because there's a lot of information to digest, after all, this is one of the biggest, if not the biggest investment you'll ever make. This first post will take us up to getting the keys and my second will go beyond.


1) SAVE, SAVE, SAVE

You've decided you might like your own place and so it's now time to start watching the pennies. To buy a house, you're going to need some sort of deposit. You can put as little deposit down as five percent of the total house price, although arguably, the more you can put down, the better in the sense that you will likely have access to a wider range of mortgages, and ultimately, it may just mean you can afford a more pricey house if you can't borrow as much as you'd like, your deposit may be able to beef up the overall amount you can pay.

I personally put five percent down. This suited me the best at the time as I didn't quite have the ten percent that most people choose to opt for, and I wanted to keep some money asidje for furnishing the house, any works that might need doing to it and also for my legal fees. When I was buying, a lot of people seemed alarmed that I was only putting down five percent and I got warned by a number of people that this would mean that my monthly mortgage repayments would be higher each month than if I had put down a slightly bigger deposit. Not so. I know, in fact, friends of mine who put down ten percent and are paying considerably more each month than me on a house of fairly equal value.

It's all about doing what suits you. Maybe you want to move into a house before you've got much of a deposit saved. Perhaps you're renting already and so it's difficult to save large amounts. Whatever the reason, it's about doing what works for you, it's your house and you're about to become a whole lot more responsible for your finances than ever before so it's important that you're realistic with this and sensible.

You may be aware of the Government's Help to Buy ISA. This has been in existence for over a year now and while I did look into it, I decided that it wasn't for me. It may be something which suits your circumstances better and I found this article which I think sets out the position well, and might help you to decide either way.

2) MONEY TALK

Ok, so you've got your deposit together and it's all very well jumping straight into looking at houses, but the reality is, you're going to need to know what your position is financially before you fall in love with a house only to have your heart broken when you realise it's way beyond your budget. 

I would recommend starting by visiting a mortgage adviser. This person is going to know your finances inside out by the time you've got your hands on the keys so finding the right one is important. I was very fortunate to find a great adviser straight off. Alan works for the Mortgage Advice Bureau and to the best of my knowledge, they operate all round the UK. Although I can only speak for my personal adviser and not the company as a whole, I would definitely recommend looking into them as a starting point. I was put onto them by an estate agent after I enquired about one of their properties and I'm very grateful for that.

I met with my mortgage adviser, answered some questions in relation to my wages, discussed my deposit situation and various other financial issues that come with buying a house. Who knew how many different types of insurance you would need now you're about to get a few bricks and a roof to your name?! Alan talked me through life insurance, home insurance and insurance that would keep me and my house afloat should I become ill or find myself out of work.

At this initial meeting, your adviser will enter these details into a site which will show you the mortgages available to you, and will provide an 'Agreement in Principle'. This is basically an agreement provided on face value of the information you have provided.

One you have your Agreement in Principle, you will then have an idea of the kind of price bracket you can look at for your house.

3) THE SEARCH IS ON

Now for the fun/highly stressful and life overtaking part. Finding the house. Rightmove is going to be your new Instagram. You will spend countless hours scrolling this site.

For me, I knew that I didn't want to move too far from my parent's. I like the area and I like familiarity so I put in the post code and set a fifteen mile search radius. I set my maximum price about £15,000 over my budget in case I found a house I loved and felt brave enough for some serious bartering skills. This is also a good plan because sometimes the sale price will be reduced a few weeks down the line to a price within your budget.

Once I'd looked through everything available up till the present, I'd check at the end of each new day and narrow my search to 'properties listed within the last 24 hours' so I could just check for anything new that day without endless scrolling again.

I saved any properties I came across that I liked so I could find them easily in future to arrange viewings. I looked at when that particular house and houses on the same street had last sold and how much for. I explored houses for sale on the next street over or just around the corner to see how they compared. I wanted to get to grips with the local property market as best as I possibly could. If I saw a house I liked, I looked into the area; local amenities, crime rates, I was a regular little Sherlock.

I had been doing this for a good half a year before I was fully ready to buy and less religiously for about a year before that, just so that I felt I was sure of what I was looking for before I was let loose on a world full of houses with no clue of any direction or perspective.

4) VIEWINGS

I found a few houses I liked, booked in some viewings and off I went. I took a day of work and dragged along Ash for the ride. On Rightmove I had a few saved but three really stood out. I decided against viewing one of those because it was a terrace that was straight onto the street with no set parking. The other two were little one bed semi-detached houses with gardens and a place to park in front of the house. After viewing both, I was left disappointed. Neither had been what I'd expected or hoped for and Ash wasn't keen either.

Be prepared for this. Sometimes something just won't click, and you should never buy a house just for the sake of getting a house. Dust yourself off and start again.


5) WHEN YOU KNOW, YOU KNOW

Feeling deflated, I decided to ring the estate agent who the third house I'd decided against viewing was on with. Being told there was no time to show me around that day I felt a bit pants, but then after enquiring which property I was calling about, it turned out that someone was already viewing it and we could jump in after them for a very short viewing. I pulled up onto the street and immediately got a good feeling. It's hard to explain, but it felt like home (before we'd even been inside). We saw the couple who had viewed the house before us leaving and I was grumpy because I didn't want them to have it (again, we hadn't even stepped inside at this point). A quick viewing later and I was besotted with the house. God it needed work but I felt this weird connection, and I became really anxious that someone else might get it.

I've been in one house in particular before where I just felt horrible vibes. It sounds silly because it's a house after all, but cheesy though it sounds, I think you'll just know when it's the house for you, and I really recommend holding out until you feel this.

6) SECOND VIEWINGS

I slept on it for a few days but nothing changed and I booked in a second viewing, this time to take my parents around with me. After all, they'd be helping me with decorating and bits and pieces around the house. Plus, they'd been there and done that so it made sense to get a different perspective from someone who  'knew best'. After that viewing, and me still adoring it, we spoke about the realistic picture of what would need to be done and the costs etc. My dad is a pretty good DIYer so I took his lead on that one.

I would say that while if you like something, it's important to move fast, you definitely shouldn't rush into buying a house. Don't let any external pressure influence you, hard though that is, when you know other people are interested. I know people who have been at this stage in the process and realised that they simply aren't ready to buy a house and there is nothing wrong with that. Timing is important.

7) OFFER TIME

Undeterred by my second viewing and the works that would need doing, I put in my offer. It bounced backwards and forwards a couple of times before we met at a price and my offer was accepted.

If you are told a seller will not accept below a certain price, there's still  no harm in offering less than that anyway, it worked out well in my case.

It is important to remember that nothing is binding at this time and other offers may just gazump yours. In my case, a potential buyer made a  higher offer than mine, however I was very fortunate in that the seller wanted to honour her word and stick with me. I would say though, as exciting as having an offer accepted is, try not to get ahead of yourself, hard as that is. I personally kept my eye out for other properties at this stage just in case.

8) LEGALITIES

Once an offer has been accepted, it's time to get on the phone to a solicitor. Being a trainee solicitor myself I am aware of the things involved in this process, however, it can be a very confusing time, with various searches being done and packs swapped. You're going to receive a number of forms and lots of information during this time and without going in to boring solicitor speak, you will be grateful of their assistance and it will be worth every penny you pay to them to deal with this on your behalf. It is definitely worth ringing round and getting a few quotes for this before committing to a solicitor because hey, you're buying a house, every little helps. Don't be afraid to ask questions, there are no stupid ones. This is all new to you.

Be prepared for this stage to take a while, searches can sometimes be slow, there can be various hold ups in obtaining information that a search has flagged up. That said, there's no harm in chasing up your solicitor so you know where you're up to at any one time.

9) THE REAL MORTGAGE

At the same time, you're going to need to secure your mortgage. This is when you will go back to your mortgage adviser, hi again Alan, and get things into place. This is also when you can get the various insurances in place too. Here your mortgage adviser will take a small payment for their services, a 'mortgage arrangement fee', a slightly larger one will be taken upon completion. Again, it's complicated stuff and it's worth paying for peace of mind.

10) NOTHING TO DECLARE?

When you're borrowing a large amount of money, any lender is going to want a whole heap of evidence from you that financially you are good for it, three months bank statements, wage slips, various other bits and bobs. They will also perform a credit check so make sure you declare everything, good and bad. Every credit check done against your name will reduce your credit score so getting it right the first time and keeping these checks to a minimum is important. I had an issue with one lender when they did a credit check and found an undeclared loan, my phone contract handset, unbeknown to me, O2 actually categorise your handset as a loan (that's why they now take two payments, one for air time and one for your device) so please be mindful of this. I had no idea and it reduced the amount that this particular lender would lend me meaning I had to approach another, this time declaring said 'loan'. Luckily this time round it went without a hitch.

11) SURVEY TIME

Lenders are also going to want to know that they're lending to something which is worth it, just in case you default and they need to repossess to get their funds back. This is when a survey will be done.

There are different levels of survey, and dependent on your concerns, it may be worth paying a little more to get a more in depth one conducted. For me though, I had a basic survey done. I knew that no matter what came back, I was going to buy this house and so I decided that rather than paying extra for the more detailed survey, I would rather put that money towards fixing the issues that it would flag up. Having my dad who has done up a couple of rental properties helped me in reaching this decision as he'd already pointed out the things I'd need to spend my money on which is probably what the more detailed survey would have done.

Once the survey report is back, it will value your house. If  you are asking to borrow the amount that the house is worth or less, no issue and your lender is then likely to give you the green light.

Your solicitor will then request the money from the lender, this must be done five days before completion (which we will get on to).

12) MEANWHILE, EXCHANGE TIME

Back to the legal side of things now. After searches and forms have been batted back and forth, questions asked and you and your solicitor are satisfied you still want to proceed, it's exchange time. This is where you pay your deposit. It is at this point that the contract of buying/selling becomes binding and it is more difficult and unlikely for either party to back out. I exchanged the day before I completed although there can be days or even weeks between sometimes.

Waiting to hear that my deposit had been received was very nerve wracking. It's the biggest amount of my own physical money that I've ever paid out so I definitely breathed a sigh of relief when I got the confirmation email. Just wait, you'll see what I mean.

13) COMPLETION

This is where the big chunk from your lender goes across to the seller, you pay your mortgage adviser and solicitor and the house is then officially yours. You can collect the keys from the estate agent and that's it. Congratulations home owner.


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