Tips to take you from tenant to buyer
After years of renting, you are now in a position to buy your first home. It’s an exciting time, but also one filled with uncertainty and emotion.
It’s common knowledge that buying a home is one of the most stressful processes we undertake and this could be magnified as a first-time buyer.
But there are incredible benefits that come with being a homeowner and with some sound planning and understanding the process, those stress levels can be kept to a minimum.
Here are CJ Hole’s top-six tips as you prepare to start looking for your first dream home.
Buying or renting... which is better?
We’re firm believers at CJ Hole in doing what is right for you. Buying a home can be right for some people but wrong for others and there are benefits to both owning a home and renting one.
With renting, you are afforded a degree of luxury not commonly associated with being a homeowner.
But owning a property allows you to make an investment for the future, rather than paying money to a landlord to invest in theirs.
Essentially, by paying off your own mortgage each month, you are taking small steps towards owning your property outright, while also making money as it increases in value in a positive market.
Tip one: Deposit is everything
We can’t stress enough the importance of ensuring you have a solid deposit to buy your first home.
While 5% of the property purchase price is generally as low as you can go, we would urge you to try to reach 10% or above before taking the plunge on your first purchase.
To cite an example, if you were looking to buy a two-bedroom flat in Cheltenham for £221,000, the average price in 2017, a 10% deposit would see you stump up £22,100. That may seem like a lot of money, but you mortgage lenders are more likely to offer you attractive rates with a higher deposit, while the larger the contribution from you, the less cash you’ll borrow and the lower your mortgage payments will be.
Tip two: Don't forget the extra costs
Now you’ve established your deposit amount and worked out your maximum borrowing potential, you’re good to go, right? Wrong.
There are dozens of added costs associated with buying a home and you should factor these into your thinking when working out your budget
This will help to ensure you don’t over-stretch yourself when the emotion of home-buying kicks in later in the process!
Here are a handful of extra costs you need to consider:
- Stamp Duty: First-time buyers currently pay 0% Stamp Duty on the first £300,000 of properties worth up to £500,000.
- Survey costs: Surveys can costs anywhere between £150 and £1,500 depending on the property size and the type of survey you wish to have. CJ Hole would always recommend you have a survey done on the property you are buying for peace of mind.
- Solicitor’s fees: Solicitors are a vital cog in the home buying wheel and charge accordingly. Most solicitors charge between £850 and £1,500 and will take their fee from the purchase completion monies.
- Removal costs: If you are happy to move your things to your new home yourself, there can be a significant saving to be made. But with all the other stresses that come with moving, most people prefer to call in a removal company to shift there belongings to their new abode. Removals firms generally charge around £600, but sometimes more, while many companies offer a packing service at an additional cost of £250-£300.
- Mortgage arrangement and valuation costs: Mortgage lenders will charge an arrangement fee and also include a separate charge for their valuation of the property. These fees are sometimes added to the mortgage and vary in amount depending on the lender.
- Other costs: Money for decoration and furnishings is easy to leave out of your budget as you only include costs you’d rather not pay in an ideal world! But including these expenses gives you a much clearer picture of the amount of money available to you so we would always advise keeping them in. And don’t forget to get quotes for buildings and contents insurance. After spending a pretty penny on your new home, you’ll want to ensure it is protected.
Tip three: Will you be able to pay the mortgage each month?
Most lenders will undertake a ‘stress test’ to reassure themselves you can make the monthly payments on your mortgage – even if your circumstances change.
It can be worth considering things like an interest rate rise or a reduction in your income when working out how much you can realistically borrow.
The lender will do this, so doing it yourself in advance will save you a needless application should you decide the loan you are after is unaffordable. Be sensible at all times.
Tip four: Check the property with a keen eye
Have you ever looked at a property and been dazzled by its perfection? Chances are you have. And that’s when emotion can kick in and sense flies out of the window.
When viewing potential properties to buy, try to leave room for a sensible approach as well as the lovely pang of excitement when you find one that works for you.
Allowing your heart to rule your head can mean missing crucial issues that could end up costing you at a later date.
Look out for things like:
- Wall or ceiling cracks
- Missing roof tiles
- Noise next door
- Shoddy electrics
- Rot on window frames
- Sluggish water pressure
Tip five: Take a look after hours
Most properties can look good in glorious summer sunshine in the middle of the day.
They can also come across as tranquil retreats – but it can be a different story once the neighbours arrive home from work at 5pm.
As well as visiting during the day, try to see the property and surrounding area in the evening. Viewing at this time will give you a different take on the property and the area and help you to make an informed and solid decision on any offer.
Tip six: Don't go over budget - ever!
We spoke earlier about emotion taking hold. When you find the property of your dreams, it is possible to get carried away on the wave and over-stretch your budget in order to secure it.
If you love it, someone else probably loves it too and they may be in a healthier position to pay for it.
If that’s the case, don’t be tempted to go toe-to-toe with them. Walk away and move on – there will be another property out there for you that fits your budget.
Your local branch of CJ Hole can offer help and advice on the current position of the market in the area you are looking to buy in.
If you have any questions about buying your first property, speak to your local CJ Hole branch who will be happy to help.