Although buying a home can be an exciting adventure, it is also one of the most stressful and daunting decisions you will ever make – especially when it’s your first time. The decisions you make along the way when buying a property could save you – or cost you many thousands of pounds, so to help you through this tumultuous journey, here is Britannia’s guide to buying a home.
Is buying a home right for you?
According to a survey by the BBC, there are currently 25 million home owners in the UK, of which home ownership is lowest in London (58%) and Scotland (67%) and compared to our closest European counterparts British citizens have one of the highest levels of home ownership at 69% compared to France with 56% and Germany with 45%, whose citizens instead prefer the mobility of renting (38% in France, 55% in Germany 31% in the UK).
Before you embark on home ownership you must decide whether it is the right thing for you. If you are one of the millions priced out of the market, and you can’t afford to buy somewhere then the decision is made for you – you have to rent. But even if you can afford to buy, you might still decide not to for perfectly good reasons.
- Advantages of buying a home compared to renting – it gives you the ultimate freedom and security, it’s your home and you can live there how you want and for as long as you want. Owning a home can save you money when interest rates are low, and you have a big enough deposit homeownership can prove to be cheaper than renting. Also, with a fixed rate mortgage you can control your costs instead of being beholden to the changing rents of a landlord. Owning your own home can also become an investment as it invariably increases in value while you are living there so your home can also become a savings plan or pension fund for later in life especially when downsizing to a smaller/cheaper property.
- Disadvantages of buying a home compared to renting – It is a huge financial commitment and as well as paying off the mortgage, there are other costs involved in becoming a home owner such as the costs of insurance and maintenance. If the housing market were to crash again like it did in 2008 then you might end up with ‘negative equity’ which would mean your property is worth less than your mortgage, making it very difficult to sell. Another disadvantage is that you have to do all your own repairs and maintenance, burdening all the costs yourself.
If you already own your own home, should you sell first?
For those who already own their own property, you might decide on whether it is more beneficial to sell your current house or flat before buying your new home. It can be risky doing things this way, however it can give you an advantage when it comes to purchasing your new home. The main benefit being that you will be able to pounce quickly when you do find your dream home. If you are ‘under offer’ you are also a better prospect for estate agents and vendors meaning the agent will work harder for you and the vendor will take your offer to them more seriously than someone at the start of their search.
How much you have available to spend on a property is dependent on how much of a deposit you can get together, following the credit crunch mortgage providers require home buyers to provide a deposit that equates to 10% of the value of the whole property you are purchasing and the larger your deposit the better the mortgage deals are for you.
Did you know, the typical first-time buyer is now 33 years old and it takes them on average 5 years of hard saving to build up the average £24,000 deposit (rising to £44,000 in London). It is believed that 4 out of 10 people buying a first home now rely on parental help.
Where do you want to live?
Deciding where best to live is a tricky one as you have to think not just of what features you want your property to have, but also the location and your future needs. You might have to make compromises either with the property or the location, or indeed both depending on your finances.
Estate agents are your friends
Although they have had a bad reputation for many years, the local estate agents are a fountain of local housing knowledge so getting them on side is key. After all they will be the central cog during the buying process pushing the completion along between all parties.
You need to visit as many properties as possible and make sure there are no hidden surprises. Estate agents should know everything there is to know about the location and properties on their books and can also inform you of new properties coming up for sale that fit your requirements, so you don’t miss the opportunity to view them. Finally, always haggle on their fee. They will always start at a ‘rack rate’ but in general their base rate is much lower. Given the price of properties these days, every percentage point counts.
Get your finances in place
Your purchase offer will not be accepted on a property until your finances are shown to be in order, if you are selling a property yourself then you have to show that this is ‘under offer’ and you also have to prove that you have been accepted in principal for a mortgage with a sufficient deposit in place. Speak to your bank about mortgages, but also shop around. There is plenty of easy to access information online and you can also get impartial advice from an IFA (Independent Financial Adviser).
Make an offer
Once you have found your new home, you need to make an offer to the Estate Agent, decide on how much you want to pay for the property, which is not necessarily the asking price. Haggling with the estate agent is always worth trying – remember you can always increase your offer if it’s turned down, it’s much harder to lower an offer once it’s been made. According to a recent article in the Daily Mail, homebuyers in the UK are managing to knock £10,822 off asking prices on average as the majority of the country remains very much a buyer’s market. Hometrack figures reveal a UK-wide discount to asking price of 3.5%.
When it comes to haggling on the price the stronger your position the more chance you have of haggling a better price and it maybe worth asking the estate agent for advice before you make your offer – though remember they act for the seller and its in their own interest to get the seller the best offer they can.
Arrange the mortgage
Once your offer has been accepted you will need to go back to your mortgage provider with the agreed offer and complete the process. If you haven’t got your finances in order by this point, then you must now scramble to do so as quickly as possible before the buyer loses patience. You will need to get the lender to make you a formal mortgage offer before you can exchange contracts. Don’t forget you also need to have funds to pay stamp duty, which can add up to 7% of the cost of the property. If you are a first-time buyer, you are exempt from paying stamp duty so long as the property costs less than £300,000.
Hire a Conveyancer (solicitor)
Following the accepted offer, you will have to find a conveyancer to handle the legal work to transfer ownership of the property to you. Your mortgage provider might require you to go with one that is on their panel; however, it’s always worth checking with the provider as if you have another option that you’re more comfortable with, they may relent. If you are able to make the choice yourself there are plenty of websites you can use to compare quotes for conveyancers, so don’t necessarily go with the one recommended by the estate agent or your lender. If you are also selling a property at the same time it is easier and more cost effective to do all your conveyancing through the same providers.
While you are in the actual buying process, now would be a good time to think about your removal options. If you are moving with a full household of possessions and furniture then calling in a professional removal company is certainly the best option to go with, if you pick a professional removal company you won’t have the stress of carrying out the move yourself. During the busy periods such as during the summer months, bank holidays and even at the end of the month (Thursdays and Fridays are the most popular days for people moving home) it is always best to give as much notice as you can before your move date to your chosen removal company to ensure they have the availability. At Britannia our fully trained professional staff are always happy to answer all your questions, no matter how silly you might think they are – and Britannia will provide you with a free, no obligation quote following a survey of your property.
Exchanging contracts and completion
This means that you are now legally committed to buying the property, and the sellers are likewise legally committed to selling it to you. At this stage you would have agreed a completion date via your conveyancers, usually for between one to four weeks after contracts have been exchanged, (this would be the day all moneys would be transferred across and you would take possession of the property, often this happens around lunch time on completion day). Once you have the completion dates, if you have decided to use a removal company then you will need to inform them of the dates straight away to ensure you are all booked in. During summer months, it’s especially important to give your preferred removal company as much notice as possible to avoid disappointment – summer is peak season, so many companies get booked up in advance!
Once confirmation come in from the Conveyancers that the transfer of moneys has taken place and you have legally completed, you will then be able to collect your keys from the estate agents and proceed with moving your belongings into your new home.
After the completion the conveyancer will send you out all the legal documentation for your property along with their statement of accounts covering all the costs and disbursements, as well as showing the purchase price of the house and the stamp duty – which they will pay on your behalf and ensure that the change of ownership is registered with the land registry.
Now that you have survived the twists and turns of buying your new home – you’ve done the moving in bit; hopefully with the aid of Britannia Movers International, who have done all your packing and heavy lifting etc, while you have generously provided copious amounts of tea to keep the crew going! You have had your empty boxes and packaging collected, and you’ve emptied your bank accounts and possibly spent your inheritance too….although hopefully not! You can finally sit back in your new home and enjoy yourself! You have earned it, you are now king or queen of your own castle!