Buying your first or next home

ASSESS YOUR FINANCIAL SITUATION

Before you do anything else at all, work out what your financial position is and, if you are going to need a mortgage to help you buy your home, find out how much you will be able to afford to borrow.  You may want to employ the services of a Mortgage Broker to help you to do this.  We have relationships with a number of good quality brokers so if you need any help in this regard, please contact us.

Start by writing down your income and expenses and any cash and other assets you have and work out your budget for buying your next house.  This will help you consider how much you can afford as a deposit and then research what this might allow you to borrow (see Obtain a mortgage) and make sure that you can afford to borrow up to this amount.

Remember to include not just the maximum purchase price of the property that you can look for, but also take into account the other costs such as stamp duty, solicitors fees, survey fees, mortgage arrangement fees, moving costs and anything that you might need to spend on your new property when you have bought it (for example a new bed or TV).

This exercise will give you a reasonable idea of how much you can afford to repay each month and should prove to be very helpful in choosing a new home.

At this stage you may want to progress to the Obtain a mortgage so that you have an offer in principle from the lender before you embark on looking for your dream home.  This isn’t essential, but it may help you avoid a great disappointment if you find the home of your dreams but your lender isn’t prepared to lend you the funds you need to buy it.

LOOK INTO SELLING YOUR HOME

If you are looking to sell your existing home to make the move into your next property, there are ways to make it more appealing to potential buyers.

When it’s a buyers’ market, you need to find ways of making sure that your home appeals to those buyers more than the other houses in the area do.  A few simple tips will help you secure a quick sale.

Kerb appeal
Yes, it is an overused cliché, but it is very, very, important.  If the house’s exterior and garden are tidy, bright and colourful and well maintained, there is a much better chance of enticing buyers inside so that you can demonstrate to them just how good your house is and so it needs to appeal to them as soon as they see it from the outside.  So, a small of amount of time and money spent on tidying up the outside could be repaid handsomely.

Become a marketing professional

Work out who you think your house will appeal to best, and then maximise your efforts in targeting that type of buyer.  For example, if it is near a good local school and ideal for young families, dress a small bedroom as a playroom, or if it is perfectly placed for commuting for a professional couple, have one bedroom dressed as an office.

Become a Carbootie

De-cluttering; it’s an absolute must.  Although you love all the mementos, presents and photos that you have collected over the years, your buyers won’t. De-cluttering will allow buyers to see beyond the mass of collectables and begin to see how they would adapt the house to suit their own needs.  Alternatively, why not consider putting some of your belongings in storage until the house is sold.

Prepare for the viewings

Many people prefer their estate agent to undertake the viewings.  This has the advantage that they are the professionals and are used to pointing out the good features and are experienced in converting viewings into sales.  However, you may want to do the viewings yourself; you are the one who knows the house best and can demonstrate to the buyer the love and passion that you have put into the house whilst you have lived there.

Whoever you decide to undertake the viewing, preparation is key.  It goes without saying that the inside of the house should be clean and tidy; a pile of washing on the dining room table or the kitchen with last night’s plates in the sink is not a good look and although petty, will put some buyers off.  Make sure the house smells clean and fresh, which doesn’t mean having to learn how to bake home-made bread, but does mean making sure that the house is free from any smells from your beloved pets, for example.  It is also a good idea to make sure that pets are out of the way, both for the pets and the buyers benefit.  Finally, put on lights and heating depending upon the time of year in order to show off the house in the best possible light.  If you have a real fire, use it; light it about one hour before the viewing.

Choose an estate agent

Don’t just consider one estate agent.  Get at least two or possibly three estate agents to provide a valuation and ask for their fee schedule.  Don’t necessarily go with the highest valuation, this may be unrealistically high which they may then reduce once they have got your business.  Do your own research on who is selling the most houses in your area and the prices they are selling for.  Also think about recommendations from friends and colleagues; if you know lots of other people who are happy with an agent, then they can’t all be wrong.

The legal bit

Once you have decided to sell your house and have appointed an estate agent, then it’s a good idea to appoint a solicitor or conveyancing firm (a firm specialising in property transfer documents) to begin the legal process as this can take some time if there is anything unusual about your property.  This will ensure that if you find a buyer quickly, then the legal side won’t hold up the process of you moving to your next home. As with appointing an estate agent, do some research to ensure that you will be happy with the quality and value of the service they will provide.

You have several offers to choose from

Congratulations! that’s a good position to be in. But how do you choose which offer to take? All buyers are equal, but some are more equal than others.  Cash buyers are good as they are not reliant on raising funds to complete the purchase.  First time buyers have the advantage that there is no downward chain and therefore this avoids the issue of the sale falling through because of the chain breaking down further down.

CHOOSE YOUR DREAM HOME

Choosing your dream home can be both exciting and daunting.  There is so much to choose from that it can be bewildering, yet obtaining the keys to the home of your dreams is one of the few “Wow” moments that we each get during our lives.

You will know what you want in your next house.  It could be having more bedrooms, a larger open plan living space, a real fire perhaps or a centre island in the kitchen.  It could be a large garden, or it could be its location next to an award winning school.  Indeed it could be all of these.

A good place to start is to write down a list of essentials (those things that you really need to have and are not willing to compromise on) and also a list of nice-to-haves (those things which would put the icing on the cake).  This helps to ensure that when you do start looking at houses, they are going to tick all the boxes that suit your lifestyle

You’ve heard it before but it’s true, location is the biggest single consideration in choosing your new home, and has a significant impact upon the value of the property, so it pays to do your research.  The internet is a wonderful tool to help you with this and can give you information on houses for sale and sold prices in the area, commuting times, quality of transport links, quality of schools, and the availability of shops and bars, restaurants and nightlife.

You also need to consider not only your current lifestyle, but also what might happen in the future.  So, look at houses that are not only going to meet your current requirements, but if these are likely to change over the next few years, think about whether the house you are considering will meet those requirements, or whether that will mean you need to move again, with all the associated costs.

Once you have done all your research and fallen in love with a property and decided how much you are prepared to pay for it, you can make an offer. If the offer is accepted, you can them move onto the next stage, finalising your mortgage (if required) and all the legal bits.

OBTAIN A MORTGAGE

With the average house price in the UK being £225,000*, buying a house is a major financial commitment.  The majority of people take out a mortgage to help provide the funds to make the purchase.  A mortgage is a loan from a lender which is secured on the property.  If the borrower fails to repay the loan, then the lender can take possession of the property in order to recover the loan.

A mortgage to help with buying your dream home may well be the biggest financial commitment you will ever make, so again, it’s worth doing your research and you may want to engage a mortgage broker or get quotes from a number of different lenders before you make a decision.

You may want to put some time in up front and obtain an offer in principle from a mortgage lender.  This will avoid any disappointments later if you find your dream home but then can’t raise the funds to finance it.  The amount you will be able to borrow will depend upon your particular circumstances including your income and outgoings and your credit history.

The basic principles of a mortgage are the same for all mortgages (a loan secured on property) but they take different forms as explained below.

Capped-rate mortgage – with a capped rate mortgage the monthly payments are guaranteed not to rise above a “cap” usually based on a maximum interest rate, but if interest rates go down, then the monthly payment will fall.

Cashback mortgage – with a cashback mortgage, this may well be a fixed or variable rate mortgage but it has the benefit of giving you extra cash to spend when you move in. This could be, for example, a one off payment of (say) £1,000 or a percentage of the overall loan and this is usually in exchange for a higher rate of interest.

Fixed rate mortgages– with a fixed rate mortgage the rate of interest, and therefore the monthly repayment, is fixed usually for a set period of time after which it will revert to a variable rate.

Offset/Current Account mortgage – with an Offset/Current Account mortgage, this combines the mortgage account with the current and savings account and uses spare cash in the later to reduce the mortgage payments.

Tracker mortgage– with a tracker mortgage, this ‘tracks’ movements in the Bank of England base rate for a specified period of time, so if the Bank of England base rate increases, the monthly payment will increase.

Variable rate mortgage– with a variable rate mortgage the rate of interest, and therefore the monthly repayment, is variable as the lender adjusts their rate in line with movements in general interest rates and therefore the monthly repayments can go up or down.

As part of obtaining a mortgage the lender will require a valuation from a qualified valuer to ensure that the property is suitable for mortgage purposes and to provide a valuation so that they can be comfortable about the amount being lent.  Note that this valuation is not a survey; if you wish you can also arrange for a survey to be undertaken which will provide you with much more information about the condition of the property.

* Halifax House Price Index December 2017

COMPLETE THE LEGAL WORK

Buying a house requires certain legal formalities to be completed, for example transferring the legal title to a property and registering this at the Land Registry.

The legal process involved in buying a house follows certain specific steps which are usually carried out by a solicitor or conveyancing firm (a firm specialising in property transfer documents).  Do some research before you appoint anyone to ensure that you will be happy with the quality and value of the service they will provide.

Your solicitor will undertake various checks including checking the title deeds and the contract and will perform searches (mining searches, water searches etc) to ensure that everything is ok.

Once the legal due diligence work is complete (and the mortgage offer is in place if required) then contracts can be exchanged between the buyer and the seller (each party signs one copy of the contract and this is exchanged by the solicitors). This is then a legally binding contract and a deposit (typically 10%) is paid at this stage.

The contract is completed several weeks later at which point the balance of the monies is due to the seller and the buyer becomes the legal owner of the property.

MOVE IN

The day of the move can be serene or stressful; it all depends how you plan it and make sure that you have a good team around you.

The key to a successful move is prior planning and preparation.   It should all start well in advance by:

• De-cluttering your existing property to reduce the amount you need to move;
• Obtain quotes from removal firms;
• Collect boxes and packing materials and begin packing the non-essentials;
• Notify people of your new address (eg banks, utilities, council, internet providers, credit cards etc);
• Organise the Post Office to redirect your mail;
• Inform other key stakeholders (eg employer, schools, doctor);
• Keep a box of really essential items and don’t let these go onto the removal van (eg toiletries, medicines, kettle, towels, bed linen, cleaning cloths and materials); and
• Arrange for pets and children to be looked after by someone else for the day.