The thought of buying a new house can be exciting… but it can also cause a little bit of concern! It may be the most expensive purchase you’ll ever make, after all.
So, what do you need to know about buying your first house?
First of all, remember this is not about property investment. You are buying a home and, in that respect, it doesn’t matter if its value rises or falls!
You need to work out how much you can put down towards the cost of a new home because most mortgage lenders will require you to make a deposit.
Of course, you first need to budget, and here at The Mortgage Dog we will focus on budgeting in a separate blog.
But the basic information you need is that many mortgage providers will expect a 10% deposit, although there are some lenders who offer deals with a 5% deposit. Overall, the best deals are accessed if you have a deposit of at least 25%.
Start saving as soon as you can. According to the charity Shelter, it can take young families 12 years to build a deposit of 20%!
We will look at how to budget in our next blog and will explain your saving options, but one of those is a Help to Buy Isa, which will close in November. We do not offer advice on ISAs, so check out the Help to Buy ISA page on the government’s Help to Buy website.
As you can imagine, this is our expertise. But what is a mortgage? It is, quite simply, a loan from a specialist mortgage lender that you pay back over a number of years. Like any loan, there is interest to pay as well as the sum that you borrowed.
Because the loan and the accrued interest is rather substantial, it will take a while to pay off, typically over 25 years. But each mortgage deal is different depending on your circumstances.
Remember, that when it comes to mortgages, you must pay what you owe as your home could be at risk if you fail to do so.
So where do you find a mortgage? You could try a bank or building society or you could try a mortgage broker.
The Mortgage Dog is what is known as a ‘whole of the market’ mortgage broker. This means we have access to mortgages from a wide range of lenders and we can often access deals which are not available to individuals. For example, we can often find better deals at banks and building societies that are not available if you were to visit the bank or building society itself.
We are based in Washington, Tyne and Wear, and our customers are generally people looking for a mortgage in the North East. We can offer mortgages anywhere in the UK, but if you prefer to speak face to face then you will need to find a local mortgage broker.
You could try searching on Google for a “mortgage broker near me” to find someone near you.
Location, location, location
First of all, and it sounds pretty obvious, you need to decide where you want to live. Do you need to be close to work or family? Are you happy with a long commute? Does it matter if you live near the coast or the country?
Some areas may be expensive and it could be difficult to find your ideal home in the area you love, so be prepared to compromise. Living a couple of miles further away may offer a better house for less money. Do your research.
TV’s Phil Spencer, from Location, Location, Location, says, “Explore the neighbourhood to find out valuable things about your immediate surroundings. Walk 10 minutes in each direction of the property you are interested in buying and observe people, amenities, parks, street lights and public transport.”
New-build or pre-loved?
A new-build house may be the perfect solution for you. Or you may prefer something older with character. If you choose a new-build property you may well be able to request fixtures and fittings that suit you from day one, and this could save you shelling out later. It all depends on how well the homes are selling. With a new-build house, remember everything is new, so walls may appear to be cracking as the plaster dries.
When you move in you’ll get the chance to write a ‘snag list’ of repairs and you should also be given a 10-year warranty against repairs.
If you don’t mind a little bit of DIY, then a pre-loved house may be for you. It will be older and will probably need some work to fit your style.
Structurally, it is advised that you get a home buyer’s report. An expert will check the house and let you know whether it is structurally sound. Sometimes this gives you a negotiating position if problems are found. If anything is found, don’t panic. Ask a builder or a trusted family member of friend because sometimes defects can sound worse than they are.
What type of home?
Do you hate the idea of sharing your front door? If so, you aren’t likely to enjoy living in an apartment. While compromise is necessary when house buying, hating your first home isn’t a great start. So make sure you are looking at the types of home you prefer.
Houses often have land, so they are more expensive than flats. But flats are also likely to attract ground maintenance payments, so figure that into your budget.
Also, flats are usually leasehold, which means you don’t own the land it’s built on. Make sure you have all the facts about how much this will be as some newer leaseholds can have incremental increases that can double in cost every 10 years. Your solicitor should advise you about this.
Leaseholds are less likely in houses, but they aren’t uncommon. Again, your legal adviser should know when they do their ‘searches’.
Remember the ‘hidden’ costs
Speaking of ‘searches’, which are what a solicitor needs to do before you exchange contracts, you will need legal advice. You can’t really proceed without getting a solicitor, so ask for some recommendations.
There are also other costs you need to cover, such as removals. Again, we’ll cover budgeting in more depth in our next blog, but it’s worth bearing all this in mind before you search for your house.
Where to find a home
Estate agents have lots of homes on their books. Make sure you find a reputable estate agent who knows the area you’re looking in very well. Pop in and get to know the adviser so they know in advance what you’re looking for.
If something fits your requirements, they will contact you and the better they understand you the more likely they are to call you first. If you’re vague they may rule out a home that would be perfect for you.
There is an awful lot more we could tell you about and we will do this in separate blogs and vlogs. But our advice is not to worry! Be methodical when buying a house and don’t go headlong into a purchase that you may later regret. And get advice.
Expert advice is worth its weight in gold, so speak to friends and family who you can trust and you know will help you buy the best first-time home for you. Most of all, enjoy looking and buying!
Once you have sorted out your budget and looked for your first home, you need to decide on a mortgage. That’s where we can help, so why not contact us today?
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