Purchasing a new home is undoubtedly a stressful experience, especially for first-time buyers. To help ease the pressure and make the process as plain sailing as possible, BRR Law have compiled our top tips to think about when purchasing your first home.
Visit a mortgage lender and appoint a solicitor before you even start looking for a property. By doing so you can get proof of funding and complete all the background checks in advance, which can save up to two weeks off the process.
Most law firms won’t start charging for their service until you find a property, meaning you can complete the relevant background checks and be ready to go as soon as you find your dream home. To speed things up, bring your ID, lender agreement and proof of wider funds, such as a bank statement to your first meeting.
You should also use this time to go through what will be covered as part of the legal service and whether the price they quote is fixed.
Protect Your Assets
If you are purchasing a property with a friend, family member or partner and are putting in unequal monies, you must put a Trust Deed in place. This will protect your assets in the case that you want to sell or break-up with your partner. Again, your solicitor will be able to help with this.
For many buyers, it’s common to use almost all your savings to get on the ever-increasing property ladder. However, these buyers can often be in for a nasty surprise when it comes to the hidden costs of buying a house.
From home insurance to expensive repairs, these can all add up to leave you seriously in debt or completely eat up your rainy-day fund. Make sure you’re aware of mortgage arrangement and valuation fees, removal and storage costs, legal fees, Stamp Duty, home insurance and surveyor fees that may crop up.
On top of that, think about utilities, maintenance costs once you get in the house, when people add up all these extra costs, the house they think they can afford is often out of their budget.
Top Tip: Budget for an increase in interest rates & Brexit disruption
Interest rates have sat at a historic low for the last few years, but the Bank of England have said that interest rates are set to rise if we get a smooth Brexit deal. Lenders will be stress testing mortgage applicants to check that they would still be able to afford their mortgage repayments if rates went up, but you too should consider the impact of a bigger monthly outlay. If rates go up, will repaying your mortgage mean you can’t afford any of the other things you like to do?
On top of this, with Brexit on the horizon, you should also consider what may happen to UK house prices. The Bank of England’s worst-case scenario says that house prices could fall by up to 35 per cent over three years in the event of a messy divorce from the EU. This could lead to homeowners becoming trapped in negative equity if their mortgage debt is higher than the value of their property – so, keep this in mind when deciding whether you’re comfortable taking out a large initial mortgage.
If a family member is helping you out with a deposit, make sure you have a conversation around whether it is a gift or a loan. If it’s the latter, a formal agreement should be drawn up by your solicitor to save confusion down the line.
Do as Much Research as Possible
See as many houses as you can before deciding.The more houses you see the better an idea you will have of what’s available in your price range.You may find you need to spend a little bit more, or that you will have to settle on doing some work on the house you buy.
Check the neighbourhood at different times.Usually, when you see a house it’s on a nice afternoon on the weekend. However, you need to know the whole story.For example, is it overly noisy on a Friday night? What’s it like in rush hour in the morning or in the evening?
It’s vital you do as much research as possible when purchasing your first house, from the outside, it may look like your dream house, but it’s important that you don’t rush into any hasty decisions. For further tips on avoiding any pitfalls when purchasing your first house, please read our five common mistakes people make when buying a house
If you’re thinking about purchasing your first home, BRR Law can help. We not only make buying property straightforward, we keep the process on track, guiding you every step of the way.
If you want to chat about your conveyancing needs, please contact us today on 01724 854000 or email to arrange an appointment to suit you.