By Alexandra Smith
Step 1 - Find a kind financial advisor:
You need a financial advisor to find out how much you can borrow and to give you a mortgage certificate so you can start making offers on properties. Find a financial advisor who is not associated with an estate agent (in-house advisors can occasionally indicate to the estate agent how much debt you can be pushed to which may mean you'll end up paying thousands more than you wanted to).
Advisors and brokers get a fee for selling mortgage products so don't be pressured in to paying up-front fees for advice. Ask around for 3 good 'whole of market' advisors then ask them each to show you the best mortgage deal they have for you before you decide who to go with (avoid pushy or condescending advisors who make you feel as though the process is too complicated to explain- it's not). Ask each financial advisor if they will give you a mortgage certificate without you having to sign up to them (it's free but they like to make you sign up first). If you can get that certificate before signing anything, you've probably found the most helpful advisor and now you can make offers on properties while you decide which advisor to use.
Ask about fixed terms, mortgage fees, valuation fees, interest rates and the life of the mortgage to find the best over-all deal for you (remember, each year, you can usually overpay by 10% of the amount you owe and that the life of the mortgage may be 25 years but you could pay it off sooner if you can afford to so don't stretch yourself too far with the monthly direct debit). Aim to repay your mortgage. Repay the interest and part of the loan every month. With house prices and interest rates going up and down at a confusing rate recently, it is best to fix a low mortgage rate and aim to pay off the loan to stop your house being repossessed in the uncertain future.
Step 2 - Shop savvy when looking at properties:
Look for cracks in walls, woodworm holes, rotten floor boards, damp walls or excess condensation and any leaks in ceilings. Cellars are handy but they may flood and having one can raise your home insurance premium. Check for soft floor boards, go in the loft and even check out what is under the stairs. Can you smell gas? (You could even take a carbon monoxide alarm with you). You may feel rude asking to look in random places or to peak under loose carpet but, if you're planning to buy it, you need to know what it is. Look outside. What are the neighbours like? Who looks after which shared garden fences or walls? Who's trees are overhanging the property and are they protected or blocking light? Is guttering and draining in a good state? Are neighbour's adjoining guttering and drainage in a good state? Are the external walls made of brick and the roof covered in slate or tile? This will keep your home insurance premiums down. Is it within 300 metres of a water source? Has it ever flooded? Is the roof simple or does it have lots of extensions which may be prone to leaking? Are the chimney stacks supported if inner structures have been removed? Are any extensions legal / was planning permission approved? Are the neighbour's extensions legal?
Lots of questions like these can be asked by your conveyancer (step two and a half - find a recommended conveyancer) when they do legal searches on your behalf and can be considered by a structural surveyor who you or your mortgage company will pay for before you buy the house. However, if you can answer some of these questions yourself then you can save time and money. For example, some searches are compulsory but others are not. You can check with your conveyancer which you need to have and may choose not to have some non-compulsory ones if you can answer the question yourself or if the answer will not affect your decision to buy the property anyway. It is illegal for a vendor to lie on a document so you may want written evidence and choose to have all possible searches done for peace of mind but your initial free questions may rule out a property before you pay to ask questions through your conveyancer. You can also ask to take an electrician or a plumber or a builder or a roofer to the property for them to quote you directly for any work that needs to be done. You don't have to pay anyone else to have this service done for you.
Step 3 - Befriend the estate agents:
If they're friendly, look at properties with them. If they're pushy or rude, don't use them. Even though they work for the vendor, it's your payment on a property which they'll be taking their substantial fee out of so the least they can do is give you good customer service. Estate agents like to know how much you are willing to spend. Decide how much you have to spend, deduct £10k or even £20k from that figure then tell the estate agent you can spend the lower figure because they keep a record of what you say and will try to push your offers up with tales of '...other interested buyers.' If you've already told them what you can spend or you wish to spend less than you initially wanted, then say there's been a change in your circumstances (such as a job loss or a new car bought on finance or the property you want needs money spent on it so your deposit will be smaller) THEREFORE you can't borrow as much as you thought you could.
Step 4 - Know the market:
When you're interested in a property, check how much 2 or 3 other similar or comparable properties have sold for recently (search sold prices in the same or nearby streets and check the size of the property, how many bedrooms, etc). Use Zoopla or Rightmove or Land Registry to find SOLD prices from the last couple of years (not 'estimated values' as they're computer generated using statistics and trends so they're LESS accurate than you're own judgement of what things are actually selling for and your knowledge of local opinion relating to particular streets, etc).
Sometimes asking-prices are inflated by the vendor and the estate agent agrees to market their property at a far higher price than it's actually worth. Don't be fooled by this. Make an offer which reflects the comparable sold prices you have found, whether you think other people shopping in the area in the future would pay a premium for the property if you need to sell it on and also consider whether you personally need to alter your budget for any work the property may need (only offer what you can afford- live comfortably in a modest house before pushing yourself to a diet of beans on toast in a decrepit mansion which you can't afford to renovate).
All offers legally have to be put to the vendor (person selling) so ignore estate agents trying to chat your offer up with tactics of suggesting what would be a respectable offer in their opinion - you can always offer more in a couple of weeks time if you get a no from the vendor. That's your choice to make, not the estate agent's. Put the offer in an email along with a copy of your ID and your mortgage certificate then make sure it is formally passed on to the vendor for THEIR verdict.
Step 5 - Be brave:
If your well researched, reasonable offer is not accepted then look for a different property (you don't want to be stuck with a property you can't sell on for what you paid for it so don't overpay in the first place). If you can't let it go, arrange a second viewing and chat to the vendor to see if you can find out how much they'll settle for (you don't necessarily have to offer it but at least you'll know how much the price tag actually was). Remember that an offer you made 6 months ago may become acceptable as time goes on so don't be afraid to reiterate your offer or wait it out. Also look at properties which have been 'reduced' or have sat on the market for a long time as these may accept lower offers than they initially aimed for (usually an over-valued property won't sell so the asking price may be optimistic anyway as things are only worth what people can or will pay for them).
Step 6 - Break your chain:
|DIY removal van to keep down costs|
If you're selling a property, consider selling it first then moving in to rented accommodation while you look for your next one. It'll save the stress of timing everything right and a 6 month rental may suit you while you leisurely view houses and make offers with your shiny 'chain free' badge on. You may have to pay for a removal van twice but your freed-up deposit can be earning interest in ISAs or savings accounts for a few months to help cover that.
Step 7 - Sell your property for a fair price:
To sell your property effectively, clean it, get rid of excess furniture to make it look bigger and find out how much similar properties are selling for in your immediate area (take in to account whether or not they had more or less bathrooms and bedrooms, double glazing, a combi-boiler, etc and adjust your price accordingly). Market the property with an accurate asking price then stick to it (don't be pressured to accept less by estate agents when you know 3 similar properties sold for what you're asking for in the last year). Be patient but keep reminding the estate agent that you're keen to have viewers over and move estate agents after the fixed period if you're unhappy with their service or marketing. It may take ages to sell, especially if you live in an expensive house, but it helps if you're clear what you want to sell for and know what your property is actually worth.
Step 8 - Keep costs down on your house sale:
Haggle for a lower estate agent commission rate. I paid 1.4% of the value of my house sale to the estate agent and checked the contract before signing. They had tried to sneak in a fixed fee which was 2% of the value that the property would realistically sell for, which would have meant my haggling would have been wasted - so check the figures on the contract or ask someone who understands fractions to check them. If you're selling and buying separately (I.e. moving in to rented before buying), you may save money using the same conveyancer. However, you may not like the first conveyancer you use to sell and may want to use a different one when you buy. If you do keep the same conveyancer, the time in between buying and selling may mean you get additional charges or the conveyancer may try to keep hold of your deposit for you while you're looking to buy (if they do keep your deposit for any length of time then ask them for the interest that they earn on it as it should be yours).
Step 9 - Consider stamp duty:
Check how much stamp duty you will pay on the property you are looking to buy. 1% of the value of the property seems fair but 2.5% of the value of the property starts to sound like the price of a new bathroom.
Step 10 - Beware of unexpected financial changes:
Check the council tax band of a property before you buy it (on the GOV website). The council tax on a band E may be twice as much as a Band B and the water bill will usually be calculated on this banding too (although you could have a water meter fitted if you know that the water bill is far too high) so you may be landed with monthly or annual bills that you suddenly can't afford alongside your new mortgage payments. Likewise, check the efficiency of the heating system so your new gas and electricity bills don't give you a shock. Remember that you may need to budget for a new boiler, heating system, double glazing, doors and insulation to keep your ongoing costs down. Check the transport costs and budget for more or less driving (judge the distance to work, town, supermarket, local school, etc). With fuel prices increasing, you may only want to run one car or not have a car at all so factor this in to the location you choose.
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Disclaimer: These tips are created from lessons I have learnt during my own experience. With regard to the content and advice on this blog, Alexandra Smith makes no representations or warranties about its accuracy, reliability or suitability for anyone. Any reliance you place on the blog or its content is at your own discretion and in no event will Alexandra be liable for any loss, damage or injury in connection with your use.