The time has finally come. Whether you’ve been living at home with you r parents, house-sharing or renting, you’re about to make the big step into buying your own bricks and mortar. Naturally, you’ve already put a great deal of thought, not to mention financial planning, into getting your hands on the keys, but are you sure you’ve got everything in place?
First time buyers, while being incredibly and understandably enthusiastic about making this life-changing move, often fall victim to the finer details involved in the process. Here are five valuable lessons that you no longer need to learn the hard way, so you can focus entirely on packing up and moving in to your new home with a touch more peace of mind.
Don’t just improve your credit score – check your report
Credit reference agencies, including Callcredit, Equifax and Experian, have made it increasingly easy to keep in touch with your all important credit score. ClearScore, for instance, allow you to keep track of how your own score is progressing on a monthly basis, with a simple numerical system. Number goes up – great. Number goes down – maybe not so great. Simple, yes?
Calculating a credit score is actually a complex, and not entirely reliable system to use as the sole indicator of how you appear to lenders. The credit reference agencies, above, each use different methods for working out credit scores, meaning there isn’t a single ‘magic’ number that any individual can completely rely on.
However, keeping an eye on your credit score going up or down is still a fundamental part of preparing to secure your mortgage. While anxiously looking out for the numbers going up, while your spending is hopefully going down, it’s perhaps more important to look at what’s going on in the background. In other words, what is your credit report telling reference agencies about your history?
It’s far from unusual for credit reports to hold outdated, or incorrect information – some of which can be the difference between ‘yay’, or ‘nay’ when it comes to your credit applications, mortgages included. The simple solution, according to Money Saving Expert, is to check that every account and address the agencies hold for you is correct, even over time. If you’ve moved several times, over the years, perhaps during University study for instance, check that your information has not become confused with an old partner, flat-mate or previous occupant at any address you’ve held.
Getting government assistance? Know the finer points
You may be one of the many who’ve been rushing to take advantage of the government’s popular, but not entirely faultless ‘Help-To-Buy’ scheme. For more than three years now, first-time buyers have had the opportunity to make an extra £3000 on top of savings for the deposit on their first home. By June last year, almost 170,000 properties in the UK had been purchased with financial assistance from this savings scheme.
Along with the Help-to-Buy loan scheme – both of which are due to end later this year – first-time buyers also have the opportunity to borrow a further 20% of the cost of a new-build home (or double that if buying in Greater London). While this scheme is certainly worth taking advantage of, especially if you’ve already been planning on purchasing your home this way, it has not escaped criticism.
The 20% loan you take out, being a ‘loan’, of course needs to be paid back after five years in the property. Homeowners can either save as much of this money as possible, during this time, or either remortgage or make a profit on the building, after five years. At least, that was the theory. In reality, first-time buyers can end up with a mortgage, a large loan, and a house that hasn’t increased in value.
Know exactly where you stand
There can be no presumptions when it comes to buying your first home, on either side of your new front door. While getting to know your finances, as above, and working out what you can afford, over time, don’t leave any stone (or brick!) unturned while you get your money in order. For instance, if you’re buying with your partner, don’t presume that because just one of you is a first-time buyer, that you won’t have to pay stamp duty on the property.
And, when it comes to the property itself, you might need to become an expert in other forms of fine detail. How sure are you that the home you want to buy is in good condition? If you’re not in the building or construction trade yourself, can you trust that the brickwork and roofing is going to last? You need to make sure that every room in your new property, plus the exterior of the building itself, is worth the money you’ve saved.
Even if you’ve already picked out and viewed a property several times, if you haven’t already made a list of several small concerns, go back and have another look. Even new-build properties, while more likely to be under guarantee, are susceptible to structural problems.
Unsure? Get a professional opinion
More often than not, you will receive a reasonable valuation of your new property from the mortgage lender or homeowner. And, during most financial transaction, ‘reasonable’ is fine. But, when it comes to a home, the difference between reasonable and spot-on could be £10,000 or so. Unless you can be absolutely sure that the information you have is right, you’ll want to get an independent, professional opinion.
A home buyers survey report is one of the best ways to ensure that the property you’re buying, is in the quality the seller says it is. You will need the current owner’s permission to do this – so be suspicious with anybody reluctant to allow a survey to take place! Findley roofers in Newcastle Upon Tyne offer this form of survey report, and will even refund the initial fee if you buy the property, and require their services again later.
It is believed that only one in five homebuyers take advantage of this kind of offer before buying a home. With potentially thousands of pounds saved, long term, by spending a few hundred more pounds now, it’s certainly worth being part of the minority when it comes to a home buyers survey report.
Keep saving for as long as you need
If it turns out that the house you had set your heart on doesn’t live up to its billing, just be patient. A home buyers survey report might have just cost you a small amount of your deposit, but it’s undoubtedly already saved you much more over time. Not many people have a back-up option, when it comes to buying a new home, so if you have to shop around again, so be it.
After being knocked back, maybe numerous times, first time buyers are often tempted to aim for a more expensive, and apparently ‘safer’ bet, when it comes to finally securing a home. However, your best bet here is again to go against the regular trend. While you should certainly continue saving, don’t necessarily aim for a more expensive home.
Instead, keep looking for something around the same price, and keep adding to your deposit. The bigger an initial payment you build up, the better the deal you’ll eventually get – especially now you know that a home buyers survey report will help you get the right deal. Never, under any circumstances, borrow any more money to help you achieve your deposit (unless it is part of a government approved scheme, of course!), and make sure to check your credit report every month.