Are you ready to take your first step on the property ladder? It’s an exciting time to be moving on from rented property and looking for a home that you can call your own.
So, if you are in a position to make the financial commitment, then good for you.
But hold your horses before you get carried away with viewing potential flats to buy and mentally moving your things in already. First, there’s homework to be done.
A property purchase is a serious investment – possibly the biggest you’ll ever make – so it pays to be sensible and do your due diligence.
Here are three decidedly unglamorous key aspects of buying residential property that you can’t afford to overlook. In fact, getting them right might just make all the difference between a successful investment and potentially being seriously out of pocket.
1) Get your finances in place
Historically, residential property in the UK has been an excellent investment – which is another way of saying that flats and houses are getting more expensive. First-time buyers now save for an average of 8 years to afford a deposit for a home.
The minimum deposit needed for a mortgage is 5% of the cost of the property but if you can put down 20%, not only will the amount of money you have to borrow be quite a bit less, you will also be able to get a much more attractive mortgage interest rate.
It’s a win/win situation as long as you’re able to find the required £46,874 deposit for the average UK home costing £234,370, according to Land Registry figures.
An independent mortgage broker will be able to talk you through all the ins and outs. There is a truly bewildering array of mortgage lenders and types of financial products out there, not to mention variations in terms of fees and deposits, term lengths and rates, that this can be overwhelming to a first-time buyer.
Choosing a reputable mortgage broker and letting them guide you through the complex process of acquiring a mortgage is highly recommended.
Start by establishing a realistic budget for your home purchase, based on your income, outgoings, and savings. Your mortgage adviser will show you how to calculate overall affordability to satisfy lenders. Once you’ve set the right criteria for your mortgage, your broker will present you with a range of providers and product options that meet the brief, along with professional advice on which is most suitable for you.
Another advantage of using a mortgage broker is that they will be able to help you with forms and paperwork to ensure a smooth application process until you have an agreed Mortgage in Principle in place and can go house hunting in earnest.
2) Check the property over thoroughly
You can now turn your attention to finding the right property for your needs. Flat or house? New-build or pre-owned? Town or country? Your budget, family situation, and lifestyle will be important factors, and no doubt you will already have some idea of the type of property you would like to own and live in.
Do you need to be close to public transport, green spaces or good schools? Are you looking for a private outdoor space or a garage? What about taking on a fixer upper? Create a spreadsheet with your key criteria so you can rate each potential property and compare them against each other.
Viewing potential contenders can be exciting and exhausting – there’s a world of possibilities out there – and it can feel like the Holy Grail when you finally stumble upon a property that ticks all (or at least most of the boxes and your offer is accepted.
But now comes the important part.
Assuming that you’re not a property expert yourself, how do you know if the flat or house you have set your heart on is worth the money? What if there are building defects or underlying issues you hadn’t spotted such as roof damage, damp issues, timber decay or subsidence that could cost you thousands in repairs further down the line?
While your mortgage lender will have their own valuation carried out to ensure it covers the risk of the loan, they are under no obligation to share any survey findings with you.
Regardless of the type of property you are buying, you should have an independent property survey carried out to establish the condition of the asset you are about to make a huge financial commitment to.
As one leading Chartered Surveyor in the South East explains, “when it comes to purchasing a property, having the peace of mind that everything is in good working order, or at least knowing the extent of any existing problems, can make a world of difference.
While a home survey may seem like another expense that one could do without, its benefits are undeniable,” Brian Gale Surveyors.
Not only will you be able to establish a realistic budget for any necessary repairs, armed with the findings of a professional RICS home survey, but you may also be able to get the vendor to carry out urgent remedial action before contracts are exchanged, or negotiate the cost off the purchase price.
And if the survey findings discover unacceptable building issues, you have the option to walk away from the purchase, your finances intact.
3) Make the property legally yours
Once you are satisfied with the condition of the property and you’re ready to proceed, it’s time for the lawyers to get involved. Conveyancing – the legal term for transferring ownership of property – is a complex process that takes years of specialist legal training.
It is either carried out by a qualified solicitor who can offer a full range of legal services or a licensed conveyancer who specialises in property but cannot deal with complex legal issues.
The best way to find a good conveyancing expert is to ask around among friends and family, your mortgage broker and estate agent. Word of mouth is a powerful marketing tool and arguably one of the most trusted.
Online conveyancing is a growing area too. Try to get competitive quotes from at least three different providers that are comparable in the service they offer. Fixed fee conveyancing deals are often the most attractive.
Crucially, you need to be confident that your conveyancer is not only technically competent but will communicate with you as and when needed.
Do they have a system for tracking how the purchase is progressing? Will someone be available if your main contact is away or off sick? A good solicitor will have the skills to deal with your home purchase quickly and effectively.