Is it still possible to get on the property ladder?
Getting on the property ladder can be a daunting prospect especially due to the fact that it is a huge financial commitment. However, owning your own property is a way of investing in your future, and the future of your family, as well as giving you more stability. If you are a first time buyer you need to be aware of all of your options and choose the scheme that is right for you and your financial situation. This blog gives advice on how to get on the property ladder and the processes you will go through to get the keys to your new home.
Buying your first property can be a time-consuming and frustrating experience but so long as you know all the correct information the process can run much smoother. Owning your own home is very rewarding so it will be worth it in the end.
Money, money, money
First and foremost you need to be realistic about money and what you can afford. You need to consider what property you can afford and how much it will cost a month. You will need to look at how much money you (and anyone buying the house with you) have for a deposit. It is more than likely that a deposit will cost you 10% or more of the cost of the house. On average in the UK this is around 26k mark. If you can put more money down for your deposit then your interest rates overall will drop.
Hidden extras
Buying a home will cost you more than you think. There are many hidden costs that you need to be ready for because they aren’t cheap. For instance, your lender can add over a grand to your costs or percentage-of-loan charges. You will then have to pay for building insurance, life insurance, contents insurance, bills, council tax, water, ground rent and even a service charge. This isn’t even including Stamp Duty and VAT.
Finding your first home
When viewing properties you need to be looking at the state of the vital amenities, such as the kitchen and bathroom. Décor can be adjusted at a fairly reasonable price, a new kitchen or bathroom cannot. Every home should come with an information pack educating you on the council tax, title deeds, leasehold information and home energy assessment. Make sure you ask for this so you are completely aware of all the costs associated with the property.
The first offer
Your opening offer is critical. You need to decide how much you can afford before you start and bid below that amount. For example, if the house you want is selling for 120,000 and you can only afford 110,000, bid 100,000 first. If this bid is knocked back raise the price by 1,000 each time until you reach an agreement.
What the gazump?
Once you have come to an agreement with the seller, you want to request that the house is taken off the market. This means that you won’t get gazumped by another buyer swooping in with a higher bid.
Signing the contract
Once you sign the contract and pay the deposit you lose a lot of your bargaining power so make sure you have everything in order before. You want to ensure you have everything you want and that you can get a mortgage. Your deposit at this stage will be around 1,000 and this amount is non-refundable.
Finding a mortgage
There are many mortgage lenders available through your bank or online. You can usually agree on a mortgage over the phone these days, or on the Internet. There will be fees to set up your mortgage of around 500 and this can go up depending on the rates you are getting for the loan.
Conveyancing
You will need to employ a solicitor to check the legal elements of the sale and make sure the house isn’t currently under any land disputes, owed to another person and that the owner has the legal right to sell the property.
Survey
Your mortgage company will require a basic survey confirming the value of the property. There are three types of surveys:
- Mortgage Valuation: This is the cheapest and will basically confirm to the lender that the property has worth and could be sold if you default on your payments. It will not spot any huge faults.
- Homebuyer’s Survey: This costs more but will be a lot more thorough, revealing any serious issues. One in four people renegotiate after this survey and reduce the overall cost of the property.
- Full Building Survey: This is the most expensive and goes into greater detail, looking at the condition of your property. This is usually recommended for older properties or homes with a rare design.
Completion date
Once all the negotiating is complete and the contracts are exchanged you will set a completion date. This basically means the day you get the keys, move in and pop a bottle of champagne. This is usually two weeks after the exchange of contracts.
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