A house is probably the largest thing you’ll ever invest in and buying a home can be a very daunting experience – even when you are already on the property ladder.
Today, of course, it is becoming more and more difficult for first time buyers to find somewhere they can afford. We have a shortage of housing in the UK and for many, especially the young, renting may be their only option.
The Government has tried to help by the introduction of the Help To Buy ISA which can give up to a £6000 boost where the buyers save £12,000 and receive a bonus of £3,000 which is topped up by a further £3000 by the Government.
This relies on prospective buyers being good savers too and, in reality, that is what is needed to make such a large investment. Not easy when you have student loans and debts accrued from your education to pay off as a first time buyer.
It’s not as easy either, for those of us already on the property ladder looking to move to a bigger property. Salaries seem to have been pegged or at the very least fallen out of line with inflation and there seems to be a huge gulf between the price of a 3 bed home and a property with 4 or 5 bedrooms.
If you are lucky enough to be in a position to move, you need to make sure that you do your homework and my personal philosophy is to get the best advice you can afford and never cut corners.
Here are my top things to think about when buying a house.
What’s your maximum budget?
The cost of the property and the move itself
Before you do anything else you need to know what you can afford. It’s natural to have done a bit of window shopping and spent afternoons pouring over online property portals but it’s all a bit pointless if you have not had your property valued and found yourself a reputable estate agent.
If you go to view a property and the seller discovers that your home is not even on the market yet, you are unlikely to secure a purchase, nor be in a position to negotiate a good deal.
You also need to factor in all the other costs of moving, for example conveyancing and legal fees, stamp duty on the property (payable where the value of the property is over £125,000) and the cost of the move itself.
You may also find there are fees to mortgage or remortgage – or there may be a penalty to pay if you are remortgaging in the middle of a fixed rate deal.
You should also seriously consider investing in the fullest survey on the property you want to buy because, for the sake of a few hundred pounds, you may save yourself from a property with subsidence, rising damp or a leaky roof.
The other big question is how will you fund the deposit on your new home?
In the current mortgage market you’ll need a deposit of at least 5% of a property’s value to get a mortgage. A lender would then lend you 95% of the property’s value. So, if you wanted to buy a £150,000 property you would need to save up at least £7,500 and borrow £142,500.
The greater the deposit, the smaller amount you’ll need to borrow which means your monthly mortgage payments will be less.
That’s a great incentive to start saving as soon as possible.
The cost of your mortgage and monthly bills
Once you have an idea of what you can afford, you need to look at whether you will be able to comfortably pay it back.
You should know what your monthly mortgage payment will be but you also need to know what council band your property falls under (and therefore the council tax bill), plus water rates and a ball park cost of utilities (which the seller should be able to give you an idea of).
Depending on the results of your survey, you may need to budget for repairs such as fixing a roof, new windows or a new boiler. The surveyor who surveyed our current property advised that the existing roof would need replacing within 5 years – and he was spot on!
You should also factor in the cost of travelling to work. Will there be an increase in rail fares? Bridge tolls? Fuel? Parking costs? If you work from home what is the broadband and WiFi like in the area?
Will you need new furniture? You don’t need to buy new – you can find great bargains on Ebay and Craigslist but you will still need to add these items into your budget.
The best thing to do is to create a spreadsheet (you could use Google documents) and list everything you can think of.
What are your absolute ‘must-haves’?
It’s very easy to fall in love with a property and let all the things you really need completely slip your mind. A great example of this is a utility room – or at least space for a washer / dryer which I really want the next time I move!
Do you really need an ensuite bathroom when a smaller guest bathroom might be more practical? More and more of us are taking in our elderly parents rather than have them go into care homes and, certainly for us, the adaptability of the property for elder care will be a high consideration.
It’s pointless being swayed by a gorgeous garden if you hate gardening and really need off-road parking.
And if you work from home, make sure you have adequate space for your office or at least an area to work in. In our last property we built a log cabin at the bottom of the garden which became the Husband’s second home. In fact I’m pretty sure this was what swayed the sale of our property as the new owner declared he was going to convert it into a bar!
Sit down and make a list of all the things you really need – both now and in 5 years time.
Location, Location, Location
Kirstie and Phil have drummed the importance of this into us for many years and certainly if you are buying your property as an investment, and not just as a home, then researching desirable areas or, more practically, up and coming areas, makes sense.
What are the local facilities like? Schools, health centre, shops, transport links? What’s the crime rate like? You can find out a lot about your potential new home’s location online.
For those of us with kids, the quality of the local schools is very important, as is the proximity of local hospitals and healthcare facilities.
Do your detective work
So you’ve found a property you like and you’ve had a couple of viewings. Your property is on the market and you are pondering putting in an offer. Better still, you have a likely offer on your own property which means moving imminently is a definite possibility.
You’ve worked out what you can afford and the impact of the move on your monthly outgoings.
You are pretty sure the area is right for you.
Actually you can do quite a bit of detective work before the first viewing. In addition to checking out the local area and facilities as mentioned above, you can check out the property’s location on Google Maps. Sometimes it is incredibly revealing.
That house in the quiet cul-de-sac? It backs on to another housing development. The house with the great garden? That row of hedges hides the M4.
The cottage with the beautiful view? Those trees hide the wind farm. I jest. But not entirely.
Sometimes a quick check on Google Maps can stop you wasting your time on a property which is not going to be right for you.
It’s also worth contacting your local council to see if planning permission has recently been granted for any large scale developments.
Once you have found your property, viewed it and fallen in love with it then a good trick is to visit it an extra couple of times but not go in. By that I mean drive by in the early evening or even late at night to see how quiet things are. Thumping music and barking dogs next door? Possibly not such a great buy then.
Sunday afternoons are another good time to drive by and gauge what the area is like when more people are home.
Don’t forget that when you view a property everyone is on their best behaviour – as I’m sure you are when people view your home.
It’s always best to view when the owners are out. It’s easier to ask your estate agent bolder questions without worrying about offending the owner who may be lurking around in the hope that you’ll make an offer on the spot.
And it’s easier for the agent to be frank as well.
In summary, my advice would be to take your time, depending on how many other offers there are on the table for the property you want. Make sure you have done your sums and are not rushing in because you love the Victorian fireplace or real slate flooring!
If you have worked out your budget, you should know the most you can afford and I would offer a little less than that to give you something to bargain with.
If, however, the seller won’t budge on their asking price, sometimes the wisest thing is to walk away.
It’s always sensible to have two or three potential properties under consideration so that if this happens you don’t have to start the entire process from scratch.
If you are unable to move immediately and need to relocate, you may have to add the cost of rented accommodation to your budget.
That extra expenditure may be a small price to pay if it stops you from over-extending yourself or buying a house that just wasn’t right for you.