A Guide for First Time Buyers
Nikki Ackerley - Property Correspondent
Buying your first home can seem a daunting task. Not only is it unfamiliar territory with lots of people offering plenty of unsolicited advice but many first time (and second time!) buyers worry about losing money on surveys and solicitors bills on a property that they do not end up being able to buy. The following tips should help smooth the way and enable you to make the best of the situation:
Finances
Before you start looking have a good idea in your own mind how much you can/want to spend. It is a good idea to get a mortgage agreed in principle as soon as possible so that when you find a house you can move quickly and reduce the chances of someone else beating you to it. Don't forget to remember other critical expenses such as the deposit, legal fees, stamp duty and possible moving costs. If this is your first home you will also need to think about what furniture you will need - you don't want to camp in the middle of the sitting room in a tent!
Mortgages
Shop around for the best deal and do not approach just one or two lenders. Your bank, independent financial advisor or your estate agent may be able to help you. It is wise to stick to reputable lenders and check the fine print of each offer to select the mortgage that most suits your needs and means. Ask your lender to tell you what will happen if you sell or want to pay off your mortgage early.
Focus
Focus on exactly what you want. As a general rule buy as large a property as possible as they hold their value better. A one bedroom flat is better than a studio for example. If you can afford it, a second bedroom can be very useful, as there is the option to rent it out if the going gets tough. Scan the windows of all the local agents before doing anything to get a feel for prices and exactly which area you want to live in. Location is the key however - it is always better to buy the worst house in the best street than the best house in the worst street.
Agents
Visit as many estate agents as possible that you have identified as having the type of property and price range you are looking for. Be clear about what you are looking for and phone them on a daily basis to ensure that your name is top of the list when a new property comes onto the books. Attitude and rapport is important as we all like dealing with people we get on well with. Be friendly to them, they are human just like you and me.
Solicitors
It is a good idea to instruct a solicitor, or at least tell him you are going to buy a property so matters can start moving forward straight away if an offer is accepted. Ask around for recommendations, your estate agent will be able to help.
Tips
Ring your solicitor regularly and respond quickly to any requests. The financial matters and contracts will also need to be checked and prepared. Chase your lender and make sure they carry out their valuation quickly. Decide whether you want to have a full structural survey quickly and put that in hand as soon as possible. A pro-active approach works wonders and there is less danger of losing the property to someone else if you appear to be keen and getting on with everything.
Jargon to look out for:
Search
Your solicitor will carry out a search on your property - this ensures that there are no hidden surprises which could affect the value such as an impending by-pass running across the back of the garden!
Surveys
It is important that you know the difference between a valuation, a home buyers report and a full structural survey. There is a huge difference in cost but also in what you will learn about your new home.
Gazumping
This happens in a rising market where the seller is king and can opt for a higher bid before contracts are exchanged, with no legal repercussions. Once an offer is made, ask for the property to be taken off the market, which will reduce the chances of this happening. Unfortunately until contracts are exchanged there are no guarantees so don't procrastinate too long!
Sealed bids
Where there is excessive demand for a property, prospective purchasers may be required to go to 'sealed bids'. This involves each purchaser supplying a written bid for the property by a pre-agreed time. The seller then chooses whose offer he wishes to accept. This is not necessarily the highest as someone in a good position to buy also has a strong advantage.
There are three main stages:
Offer
Once you have found your new home making an offer is the first step. Once this is accepted you can move to the next stage.
Exchange
Exchange of contracts takes place as soon as your solicitor has carried out a search, satisfied any enquiries and when your mortgage is formally in place. At this stage both parties are legally committed to the sale and you will be required to pay your deposit (usually 5% or 10%). The next stage is to arrange your household insurance and start packing!
Completion
This usually takes place four weeks later but can be done in a matter of hours after exchange in some cases! This is when the money is transferred from your lender to the seller and when you get the keys.
Good Luck!
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