Advice for first time buyers

Advice for first time buyers

Buying advice from Petermans for those of you looking to get onto the market for the first time.

 

What is your budget?

  • Discuss your ideas with an independent mortgage adviser, to ensue that you receive an unbiased selection of more available mortgages.
  • The result would usually be a loan offer of up to 3 or 4 times your income, i.e. £30,000 will gain you a loan of at least £90,000, and a couple together would tend to be offered 2.75 to 3 times a joint income.
  • You have to have a deposit and depending on the size of this, lenders will offer a lower interest rate. Ideally a deposit should be at about 25% of the overall value of the property.
  • Ensure that you get at least 3 quotations on purchasing a property, as these vary greatly. Most estate agents have recommended solicitors they know and trust, so it usually makes sense to compare between a few options to be certain of the best value for money.
  • Stamp duty is another fee to consider as the charges are related to the overall price of the property:

Purchase price/lease premium or transfer value

SDLT rate

SDLT rate for 
first-time buyers

Up to £125,000

Zero

 

Zero

 

Over £125,000 to £250,000*

1%

Zero

 

Over £250,000 to £500,000

3%

3%

Over £500,000

4%

4%

(Quoted from http://www.hmrc.gov.uk/sdlt/intro/rates-thresholds.htm)

  • Before you can proceed with buying a home the bank/building society have to carry out a survey of the property you wish to buy, to ensure that the property is worth the money they are going to lend you. There are a choice of two surveys that they will provide:


The lenders (valuation) survey:

This comprises of a mortgage valuation and a property inspection to establish the amount and terms of a loan, then tell you how much the property is worth. However it does not cover a structural inspection which can lead to problems in the future. The price for this survey tends to vary from between £400 - £600.

 

The homebuyers survey:

There is one main difference between a Homebuyers Survey and the Lenders survey. This is that whilst it covers the same idea of a mortgage valuation and property inspection, the Homebuyers survey also provides other checks for any defects there might be i.e. damp, dry rot etc, as well as to advise you on whether or not it is financially viable to proceed with lending you the money you will need.  With this in mind the Homebuyers Survey is more expensive to a charge of £600 - £800.

 

Looking in the right places to find the right house for you

Check on websites such as: www.findaproperty.co.uk, www.rightmove.co.uk, www.zoopla.co.uk, www.primelocation.co.uk – they continuously update their database for the most recent properties and prices. As well as these sites, there are always estate agents home pages that will allow you a certain amount of information, and contact details for referrals in the future.

Register with estate agents. Give them as specific amount of details as possible to allow for quicker turnover with feedback from them to you on what properties are out there.

 

Making an offer?

Before deciding on making an offer on a property make sure that you have viewed more than once to be certain that it meets every single requirement you have made. You may see things you would like to change or enquire about second time around, that you may not have noticed on the first viewing.

There are a few factors to consider before deciding on the value of your offer;

  • Is the property leasehold, freehold or share of freehold?
  • How long has the property been on the market for?
  • What works would need to take place?
  • What are the service charges?
  • Ask if the property can be taken off the market to prevent “gazumping” (passing on a higher offer to the seller whilst still processing the primary offer)
  • Make an offer!

Once your offer has been accepted:

 

Buying your property?

  • Appoint a solicitor – as you will need one to progress with all of the conveyancing.
  • Inform your financial advisor – So that the mortgage application can be processed.
  • Pay for the survey you have chosen.
  • Wait for solicitors instructions.

Once the paperwork has been completed to the solicitor’s satisfaction you will be ready to:

 

1) Exchange contracts:

This means that you are legally obliged to the purchase of the property. A deposit of at least 10% has to have been lodged with your solicitor as cleared funds so that the exchange can take place.

This is the first of two parts that will result in the purchase of your property. At this point if you are buying a freehold property OR a leasehold property where you are responsible for your own building insurance you must have obtained the building insurance from the date of the exchange.

2) Completion:

Once this has taken place, the property will officially belong to you. An average time between exchange and completion is usually a week although this can be negotiated with your solicitor and the owner of the property you are buying. You should expect a phone call from your solicitor informing you that you can collect the keys from your agent.

You are now ready to move

Congratulations!