How To Buy A Home

For many people, it’s the biggest financial transaction they’ll ever make, so it’s important getting it right the first time. Sometimes, buying a house can feel like a dizzying set of rules and regulations. But, armed with the right knowledge and know-how, you can start realizing your homeowner dreams — the fast, easy, effective way.

1. Strengthen Your Credit

The higher your credit score, the better interest rate you’ll qualify for. This is extremely important. The difference between a 4.5% interest mortgage and a 5% interest mortgage can add tens of £1000’s over the life of the loan. Pay off credit cards and loans and make sure you resolve any issues with creditors, otherwise you may be severely limited to the number of creditors available to you. If you have a poor credit record, you may have to go to a specialist lender who will charge you higher interest as you are a higher risk.

2. Get A Pre-Approved Mortgage

Apply to several lenders within a two week period so that the inquiries do not damage your credit report. Do this before contacting an estate agent so you have a firm idea of what you can afford, and you don’t accidentally fall in love with a house that you can’t afford.
Sellers love buyers who have all the finances in place and there is less chance of the sale falling through. So try and get a mortgage agreed in principal before putting in offers. Don’t get confused with the lender estimating what you can borrow. This is only an estimation and not an approval as to how much you can borrow.
Make sure you shop around for a mortgage, don’t just choose your own bank because you’ve been there for years. There are hundreds of lenders who all want your business and will climb over each other to get it.
Once you’ve found the right mortgage for your circumstances, you will know exactly how much you can borrow. Too many people assume how much they can borrow and fall in love with a home they can’t afford. You need to take in to account an increase in interest rates. Don’t borrow beyond your means when interest rates are low.

Make sure you shop around for a mortgage, don’t just choose your own bank because you’ve been there for years. There are hundreds of lenders who all want your business and will climb over each other to get it.
Once you’ve found the right mortgage for your circumstances, you will know exactly how much you can borrow. Too many people assume how much they can borrow and fall in love with a home they can’t afford. You need to take in to account an increase in interest rates. Don’t borrow beyond your means when interest rates are low.

3. Get A Solicitor

By getting a solicitor involved now can save time in the long run. Your solicitor will deal with all the legal aspects of buying and selling your property. Personal recommendation is the best way to find one or you can contact the Law Society (0870 606 2500) or the Council for Licensed Conveyancers (01245 349 599) for a list of names. Get quotes from several solicitors and ensure you know what you are paying for. There are many good solicitors that specialise in property.

4. What Do You Want From A Home?

You probably already have a vague idea of what you are looking for and have discussed it with your partner/family. There are a couple things in particular that you should give good thought to. What will you and your family need in several years? Maybe you’re just a couple right now, but are there are plans for kids in the future? A home that comfortably fits two people could be torturous for three or four. Are you and your partner prepared to make sacrifices? In other words, what are your priorities? Although we like to believe that buying a house can be straightforward, it’s often a complex ordeal in which we’re forced to compromise. Do you care more about a safe neighbourhood and good schools over a big garden? Do you need a big, workable kitchen more than a big luxurious bedroom? What are you willing to sacrifice when it’s crunch time?You may want a home that requires renovation so will also need to take this into account when planning your finances. There’s no point in being mortgaged to the brink if you can’t afford to spend money on new windows and doors.

5. Where Do You Want To Live?

Look at local prices, types of houses, proximity to shops, schools, local amenities. Do you want to be near friends, families, work? What is the general state of the area? Drive around places during the day and night. Somewhere may look great on an evening, but during the day be full of commuters or shoppers who park their cars all day to avoid the local ‘pay and display’ car parks.

There may be a local pub or club open until the early hours of the morning with drunken revellers rolling about all evening. Look out for selfish loud or noisy neighbours with hot tubs, who like to party when you like to tuck up with a good book. Is the property near factories or warehouses where juggernauts are rumbling past 24 hours a day, 7 days a week.
There are so many things to take into consideration when making your investment, you just need to find out as much as you can about the local area and know that the property is right for you.

6. Find A Home

Now it’s time to find your perfect home. You have your mortgage in place in principal and know exactly how much you can borrow. You have instructed a solicitor who is ready and waiting. Now it’s down to you to start trawling the local property paper, scouring the internet, signing up with estate agents to get details of the latest properties as soon as they are on the market.

It doesn’t cost anything to view a property so don’t be afraid to do so. Take into account the layout, does it work for you? Is there space to expand as your family grows? Is there plenty of storage space, loft, built in wardrobes, spare toilet, parking or garage, garden shed? Listen for road noise. Visit in the day and evening and check out traffic congestion. It could be a rat run during the rush hour.
Compare prices of similar homes in the area. If the property has been on the market for a while and the vendor won’t budge on price, perhaps it’s overpriced because the owner has to fund a debt or needs the asking price to be able to afford their next property. Do you want to pay over the odds? Is it really your dream home?
Try and buy the cheapest and most rundown house in a street. If you then renovate the property, the price of all the other properties in the street will then go up dragging yours up even more, everyone’s a winner.
Avoid buying the most expensive home in a street, it may have already reached it’s peak. It’s value will only go up in proportion with local trends.

7. Make An Offer

Ask the agent of the vendor as many questions as you can. Find out their circumstances and reasons for moving. They may be in financial difficulties and need to sell fast. It may be a deceased owner and the family want to sell asap to get their hands on the money. Maybe they want to move and have already had an offer accepted on another property. The owner might be moving for work. These are all scenarios that can work in your favour, big time!!! This puts you in a strong position to make a seriously reduced offer.
However if the owner is in no rush to move and just looking to downsize, you may have to pay the asking price.
Ask the vendor how much they pay for bills, as this may make a huge difference as to whether or not you can afford the home. Are they on a water meter? What are the heating costs (efficiency of the boiler)? Has there been much interest? Have they had other offers? How long has it been on the market? Why are they moving?
It could be that a property price seems too good to be true. If particularly desirable, properties can be priced low to get lots of interest and start a price war where bids are well over the asking price. Don’t get sucked in!
Generally buyers will make an initial offer of around %10 below the asking price.
However, this may put you in a position where you can get gazumped (the owner accepts a higher offer before you have signed a contract). If you really have found the place of your dreams, be prepared to offer the full asking price and ask for the property to be removed from the market.
Ask the agent to formally submit your offer. You can then arrange for the deposit to be paid as soon as possible to secure the deal, after which time there would be penalties to pay if the seller pulls out.
You also need to sell yourself. Let the vendor know if you are in a strong position such as chain free, how quick you can move, you have a mortgage in place, you have a cash deposit, etc.

8. HIPs (Home Information Packs)

When buying a property, it would usually come with a ‘Home Information Pack’ – HIPs for short. This will contain important useful information including a energy performance certificate, sale statement, standard searches, proof of title and additional information if required.

9. Commission A Survey

Once an offer has been accepted subject to contract, you ideally need to get a survey of the property. Depending on the depth of survey, it acts as a ‘MOT’ for the building and will unveil any problems or defects of the structure. It may be that the vendor is already aware of any issues but you haven’t asked. They aren’t going to point out flaws for you, it’s down to you to ask.

10. Close The Deal

Once all parties have agreed to the sale and confirmed the smaller details such as fixtures and fittings, timescales etc., you will need to sign all the necessary documents with your solicitor. This will include mortgages, deeds and title, which shows that no one else has any claim to the property. If anything is outstanding, money may be set aside which acts as an incentive for the seller to resolve the problem quickly in order to receive all the relevant funds.

Now you should be in a position to receive the keys from the agent and your the proud owner of a new home.