Buying a house is one of the biggest and most complicated purchases you will make in your life. Navigating the market as a first time home buyer is not easy, so we’ve compiled five tips and tricks to help you avoid costly mistakes.
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Challenges of a First Home Buyer
One of the largest purchases a person makes in their lifetime is to buy a home. Trying to buy a house for the first time is not easy. For a single person, the price of a home and the process involved can appear particularly intimidating. With the average first time home buyer reported to be facing a deposit of £33,000, it has become increasingly difficult to climb on the property ladder over the last few years. For those seeking to purchase their first house alone, we at Quick Loans Express have produced a couple of tips and suggestions that will assist you along your journey of buying a home.
First Time Home Buyer Mortgage Brokers
Most people will need to get a mortgage in order to fund the purchase of their house. However should you use a direct lender or a broker?
When it comes to short term financing, many prefer to search for instalment loans from direct lenders only, as they tend to be faster and simpler to obtain. Additionally, your information will not get passed around the way it does with a broker. However, things are a bit different when it comes to a mortgage.
Looking for a mortgage is a challenging task. Different providers will each have their own set of rules and their own set of fees. If you approach a mortgage provider directly, they will probably only be able to offer advice on their products. Mortgage brokers, however, will take the information you provide and look through many different providers to find the best mortgage for your circumstances.
Any agent should make clear to you precisely how much your mortgage will end up costing you, including any charges or free surveys. Mortgage brokers will usually be very familiar with the industry, and may even have advice to share about important issues, such as the outlook for interest rate rises. Knowing this type of information can help you make the right decision. However, as we will soon discuss, nobody can tell you with 100% assurance what will or won’t occur.
First Time Buyer Vs. Prime Location
A lot of people have fixed ideas in their mind about where they want to live. They then restrict their searches to these areas only.
You may well be surprised by how much more you can get for your money if you expand your search net and look at houses in other locations. If you’re a first time home buyer, you may decide to compromise on the location in order to acquire the house you desire. If you’re lucky, you might even find an ‘up and coming’ area that is still undiscovered.
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Ensure You Get a Home Evaluation Survey
If you’re taking out a mortgage, a creditor will most likely do their own evaluation survey. They want to ensure that the house is worth the amount you want to pay. However, remember that a valuation survey is not a complete survey. It’s well worth checking which kind of survey could be most suitable for you. A HomeBuyer Report, for instance, can be opted for by people who are purchasing a home which looks like it’s in relatively good shape.
This sort of survey can alert you to any major issues, but the surveyor won’t check beneath floorboards, for instance. This generally costs around £500. It may seem steep, but finding out about problems in advance can save you from turning desperately to quick cash loans to cover emergency repairs. You can get more or less comprehensive surveys for different costs. It’s crucial to understand what sort of survey you’re receiving and exactly what is and isn’t included. For a comprehensive list of surveys and their advantages and disadvantages, visit the Money Advice Service‘s site.
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Keep Calm When Buying Your First Home
- It’s impossible to accurately predict the future.
- Take guidance from professionals and use it to inform your choices, but try not to worry too much about all the what-ifs.
- As we mentioned previously, nobody can forecast the future with 100% certainty.
How a First Time Home Buyer Should Exchange and Reach Completion
The two main stages of the final steps of the sale are:
- Exchange, where the contracts are signed and exchanged
- Completion, which is moving into the new property
Although they can occur on the same day, this is seldom true. A lot of individuals now need a few days, weeks or even months between completion and exchange. This gives them the time to organise moving vans and to give in notice on leased accommodation.
It’s important to note that, it might not be an especially good idea to hand in notice on any leased accommodation until you’ve exchanged contracts and are fairly certain the purchase will proceed. Otherwise, you might discover that you’re left without a house. Talking to your lawyer about your legal position is a fantastic idea when you have any queries or worries about the home buying procedure.
Research to Buy your First House
Buying your first home can be stressful, particularly if you’re a first time home buyer. On occasion, it could be required to expand the search net to find that dream house. Purchasing a house is often a time-consuming and very demanding undertaking. Do your research and solicit expert advice to make sure you completely understand the procedure. First and foremost, enjoy it. If it all works out, you’ll never be a first time home buyer again!
How to Save for a House
I believe it is all about your mindset when it comes to saving for a disposit. It is crucial that you keep your long term money goals at the forefront when earning, spending and saving money. When I was saving more my downpayment, I always kept a clear vision of the house I was going to buy in my head as an encouagement.
Save for a House As Early as Possible
From when I got my first job, I always knew I wanted to buy a house. My paycheque was small, but I started saving straight away, even if it was just £50 a month. When I started earning a little bit more, I used to budget for my savings. I had a direct debit of £200 that would go straight into my savings account a few days after my monthly paycheque. Also, whatever I had left at the end of the month, even £5 or £10 would go straight to my house fund savings.
Starting to save early in your life will get you on the property ladder much faster as you can benefit from accumulated compound interest. Starting to save early on in life helps you develop positive spending and saving habits. If saving is your priority, even small change will find its way into your savings account.
Saving for a House? Do without!
Another obvious way to save money is to cut costs. I avoided getting coffees, buying store-bought lunches and going on nights out. This doesn’t mean I didn’t have fun. I set aside a budget for holidays and nights out and stuck to it. When I was out shopping, and I liked something that wasn’t essential nor cheap – and I would usually splurge – I would say, this one is for the house, and I would put that money away in my savings instead.
Budgeting is King When it Comes to Savings
Financial experts are not wrong when they say the key to keeping on top of your money is budgeting. Budgeting is essential for a healthy and positive relationship with money and allows you to live your life on what you can afford. Besides for the ordinary expenses, budget for extras as well, so it doesn’t become a huge monotonous chore and one that you will need a online payday loan to keep up with.
Help to Buy: Government Schemes
There are a few government schemes that can help you save towards a downpayment and one that I personally invested in.
- Help to Buy ISA or Lifetime ISA – you can receive 25% or up to £3,000 towards your downpayment when you save money in one of these ISAs.
- Rent to Buy Scheme – The government have selected rent to buy properties that allow you to rent a property for 20% less so that you can save for a disposit. You can go on to buy the property you already live in when you can afford it.
- Benefit from Stamp Duty Land Tax Exemption for properties up to £300,000 or price reductions on properties up to £500,000.
There are other ways that you could save money to buy a house. For example:
Move-in with your parents or a close friend
If it is possible, moving in with your parents, close family member or friend is an ideal way to cost your rent costs and save for a mortgage instead. However, you need to treat this opportunity correctly, so it will not spoil your relationship. You will need to agree beforehand how much you will contribute towards rent, electricity and other household costs. As you will be living in a shared living space, you will also need to decide how you will split the chores and the rules of the house. You will also need to find a way to live independently within your parent’s house. (Not an easy task!)
Save Money for a Mortgage by Getting a Lodger
If you have a spare room, you might want to consider taking in a lodger to lower the cost of your current rent or use that money towards saving for a downpayment. You can read more about the legal and personal considerations about taking in a lodger here.
Renting for Less Will Give You a Higher Mortgage Deposit
Although it may not be so convenient, it may be worth your while renting something smaller, moving into shared accommodation or moving further away, so your rent is cheaper. In my experience, together with my partner, we rented a studio flat, and although it wasn’t easy, we remained laser-focused on my main goal and saved a lot of money that way towards a downpayment and avoided UK short term loans.