Buying a house, especially for first-time buyers, can be an exciting and daunting experience.
People often say to put your money in bricks and mortar, and you won’t go wrong, but here on Skill Builder, we get countless emails from people who either did go wrong or are looking for a safe path through the minefield of purchasing a property. So here is our attempt at a roadmap.
Scraping Your Money Together
Before looking for a house, as a first time buyer, you must find what you can afford. Many people max out on their mortgage, and when interest rates go up, or their circumstances change, they cannot continue the payments.
We all want to buy the biggest house in the best area, but you need some wiggle room. Chucking the keys in after two years of paying a mortgage can leave you scarred for life, so be realistic.
Get pre-approved for a mortgage
‘Getting pre-approved for a mortgage, especially for first-time buyers, is a good idea.’
Once you have a budget in mind, getting pre-approved for a mortgage, especially for first-time buyers, is a good idea. This will give you a better idea of how much you can borrow and help you narrow your search to properties within your budget. Having a pre-approval letter from a lender also makes you a more attractive buyer to sellers.
Think carefully about leasehold properties
If you buy a flat, but somebody else owns the land, you will have a lease from the freeholder, which means you have to pay an annual ground rent and service charges, and you never really own the property outright.
It might seem like an insignificant sum or detail in the grand scheme of things if you have a 99-year lease, but some leaseholders have suddenly found themselves with a new landlord who wants to impose conditions or put up the ground rent.
The law will likely be changed on leasehold properties to give the leaseholder more rights but check what a lease hod will mean for you.
The best scenario is where the leaseholders club together to buy the freehold so you become a shareholder in your apartment block.
The recent problem with unsafe cladding is one example of how leasehold properties can leave you vulnerable.
Find a reliable estate agent
Working with an estate agent can be beneficial, especially for first-time buyers. Still, estate agents are in the same league as solicitors and plumbers regarding a lack of public trust.
The estate agent is working for the seller, not the vendor, and it is in their interest to get the most they can for the property, so don’t expect them to do you any favours.
A reliable real estate agent can help you find properties that meet your criteria, negotiate with sellers, and guide you through buying.
These days you can do the whole thing online, but there is a lot to be said for an agent with experience and knowledge of your area.
Consider the location
You can change many things, but you can’t change the location. When you buy a home in a particular area, you are really buying access to amenities.
Good amenities will make the property more expensive, but it will hold its value and be easier to sell to others who also value the amenities.
Being close to a railway station or the tube may be necessary, or parking might be a priority.
It may be that you are buying in an area that is up and coming but don’t fall for the estate agents’ hype on this.
Consider aspects such as crime, air quality and noise. Some things don’t become apparent until you stay in an area, so spend some time in an area you plan to buy in if you can stay in an Airbnb for a night or two, that might help you get a feel for the area.
Buy for the right reason
It is incredible how many people are swayed by superficial things when they buy a house or flat (apartment). Its easy to be dazzled by decor or dressing.
Try to be hard-headed on this and consider the layout, room sizes, storage space, and overall house functionality.
Storage space is something that is often missing in modern homes, so think about how much you love your stuff and what you are willing to get rid of to move from your palatial accommodation at Mum and Dad’s house to the pokey flat you are about to sink your life savings into. Yes, they want to eliminate you as much as you want to be free of them.
Surveys and surveyors
When you finally find a place you want to make an offer on, you will need a surveyor to inspect it.
Your mortgage company will appoint a valuation surveyor to make sure the property is worth the money they are willing to lend you on the property.
If you default on the mortgage, they want to be sure they will get their money back, and that is all they are interested in.
You may also want a full survey to ensure no significant problems. Complete surveys are very variable.
They can be as vague as saying, “we were unable to check the condition of the floorboards due to fitted carpets, we could not inspect the loft area due to the owner’s personal items”.
You also have to face the prospect of getting a survey on a home that you may then reject. That is money down the drain.
Often if you can find a local friendly builder who will run his eye over it and give you an idea of how much things cost to put right, you will do well in the initial stages, but the builder will only be able to give you some guarantees.
Don’t rush into a decision
Most of us have suffered buyer’s remorse at some point. If it is a pair of shoes, you get over it, but if it is a home, you might take a little longer to conclude that it wasn’t the right choice for you.
If there are two of you in the purchase, try to have a frank conversation away from the pressure of estate agents.
Spending your weekends looking at houses and flats can be very wearing, and there comes a point where it ceases to be fun, and you want it to be over.
That is the dangerous time when you can make a wrong decision. Most of the time, you will know instinctively if it is right for you, so trust that and if it doesn’t feel right, walk away.
Be patient and wait until something comes along that you love. Make your first-time buyers experience a positive one.
Factor in additional costs
When buying a house, it’s essential to factor in additional costs such as stamp duty, solicitor fees, and insurance. These expenses can add up quickly, so budget for them.
Then you have to think about builders and what they will cost you to do those things that need doing. Never underestimate this. These days even builders are shocked by the price of materials.
You may even think of doing a lot of the work yourself, and this is great, but it takes years out of your life, and I have seen many a fixer-upper run out of steam. It may be beneficial to start simple as first-time buyers, feeling your feet before jumping in at the deep end with a lot of potential work.
Plan for the future
When buying a house, you must decide if it is a stepping stone or your forever home. Consider your long-term goals and how the house will fit into those plans.
For example, if you plan to start a family, ensure the house has enough space and is in a family-friendly neighbourhood.
If you want to get your foot on the ladder and move on, buying a house that others might also like is more important.
Making money on property is a very tempting thing. We have all seen those daytime television programmes, but a lot of the money people make on flipping properties is due to the rise in prices rather than the improvements they make.
I know one lady who buys houses, gets someone to come in and paint them white, cleans the windows, tidies up the garden, and then puts them back on the market.
I saw her do this with a house near me, and she marked it up by £100k for two weeks’ work.
I kicked myself for not having the guts to buy that house, but I would have got bogged down in the repairs and made a lot less.
Sometimes less is more in this game, especially as first-time buyers.
See more about home buying on Skill Builder
Further Reading
Top 10 best places to live in the UK
First-time home buyer financial guide
Buying a leasehold house – Freehold vs leasehold
Shared Ownership – all you need to know!
