At some point in our lives we are going to buy a home, and this is probably the biggest decision we are going to ever have to make financially. At times you will become frustrated, you will feel like it is taking forever, but if you know what to do and expect it can make the strain so much less.
With the right help and information, your task can feel a lot easier and make the process so much more rewarding long and short term. In this article I will give you all the information you need in order for you property search to be as comfortable as possible.
The biggest worry when it comes to buying your first property will naturally be money, and how much you can realistically spend. So many first time buyers fall into the trap of spending more than they can afford, and buying a bigger home than necessary.
What you can spend will depend on how much you can actually borrow, and what you can afford to pay back. You do not want to end up in financial worry because you have a huge mortgage to pay that you cannot afford, you still need to be able to live.
Traditionally you will be able to lend 3 and a half times the main earners salary however if two and a half times the earners combined salary is a higher number you may be able to loan this instead, depending on some companies.
It will probably take 20-30 years to pay whatever you lend back, and over these years interest will grow, so don’t be flattered by what you can lend and allow it to cloud your judgement. No matter how big the sum is that you have to pay, you will in essence be paying more back over your life time so bear that in mind.
I strongly advise that you do not spend literally everything you have to lend, as if for whatever reason problems occur you will be completely penny less. So always leave yourself a reasonable amount of money to fall back on.
You cannot rush into anything
So many first time buyers rush into buying a home and within a year probably wish they had never done it. You are going to be overwhelmed at first when buying a home, and the first home you see may seem perfect, this is because you are desperate for your own place.
Something you should always do when viewing a home, is ensure you go back after the first viewing, with somebody you trust and know what is best for you. They need to be theoretical, instead of looking how lovely the living room looks with the furniture, think about is the bathroom in need of updating?
A good idea on the second visit is too make a pro’s and cons list, this will help you think logically, you may love the home right now, but within the next couple of years how much work are you going to have to do to it?
If this is going to be a lot then can you afford that on top of the money you have already lent? Probably not, so maybe this home isn’t the one for you.
The bidding process
This is when you need to know you are completely happy with what you are choosing. And when you are you will be ready to put your first bid to the home owner.
You need to know exactly what you can afford to spend, this should depend on the property itself, what I mean by this is do not say you are willing to spend £150,00 that you can afford on a home that is only valued at £115,00 just because you want your home, set standards to stick too.
When you are putting your first bid on the table never offer the value that the home owner wants, you need to have a tester, see how desperate they are to sell and test the water. If the home is valued at £100,000 then think about an offer of around £90,000, this will give you a rough idea of how negotiable the seller is and in some cases will get you the home for a lot cheaper than expected.
Every offer should probably increase buy a couple of thousand pounds at the most, and drive a hard bargain where you can! You need to switch your emotions off when it comes to make bids, don’t be overwhelmed if an offer is rejected and rush into the next offer, as chances are the seller is just as keen to get rid of the place as you are to buy it.
This can be the most dangerous time in your property search, finding a mortgage. Be aware that any estate agent who tells you they will find you a mortgage, or a good mortgage will be lying, the chances are they will not find you a good deal.
They usually have deals with specific brokers that will mean they will pocket a nice healthy sum for securing the deal, meaning your best interest is not there worry, no matter what they tell you.
In today’s current economic downfall, you can agree a mortgage with most lenders on the internet or via the phone. This allows a speedier process and means that the deal can be done at a much faster rate.
You average lender will most likely charge you around £500-£700 for setting the mortgage up however depending on the deal this will vary, with lower fees you will be charged lower rates on vice versa. Always bear in mind additional fees for things such as stamp duty, solicitors and any other people such as home inspectors that you have had to deal with.