After landing my first 'proper' job I now have a good, steady income and it looks like I wont be moving for a while. So I have decided to buy a house and end years of living in houses/flats that I don't like and then have to move every year, etc. However I have no idea what I need to take into account and what to watch out for - my parents last bought a house before I was born and are next to useless with money to they aren't any help! Any advice from here?
Go see your potential mortgage lender and find out how much they'd be willing to lend you. Don't forget to try and get something a lot cheaper as you don't want to be right on the line unless you're happy to live like a pauper. Also make sure you start trying to work out what you do and don't like in every house you walk into. You want to try and work out what you're after.
Your going to need to have enough cash to cover a deposit, probably in the region of 20% and enough for fees and stamp duty (if applicable). First port of call is always visit an independent financial advisor and they will run through the figures for you to see if your able to afford a mortgage and meet the lending criteria. If you do then you will know how much you can spend and start your search from there.
Thanks for your help. I think I'm ok on the Morgage/Deposit front. I have no idea how the process works when dealing with Estate Agents, making offers (what is a sensible offer?), Soliciters, what fees are invloved, contracts etc.
it may be a good idea to see a mortgage broker as they can explain all that in detail. The key piece of advise i have is there a 2 methods of service when you visit your bank or a broker for a mortgage so be careful of what they tell you. 1 is advising which means they will offer you the best mortgage for YOUR circumstances and if it isnt suitable its THEIR fault. 2 is non-advisory where they simply offer you some packages and you have to make the decision which to go with. In this instance the bank or broker is not looking out for you but whats best for them. They would not say which product is best for you, they would say something like this is one of our popular mortage schemes etc. They should show you a form to say which they are offering you as its LAW.
I have only purchased houses in Scotland and our system is very different. Do you guys have the equivalent of a home information pack?
Quote: (England) Home Information Pack duties were suspended from 21 May 2010. This means that homes marketed for sale on or after this date will no longer require a Home Information Pack (HIP). However, Energy Performance Certificates are still required. More info here: http://www.communities.gov.uk/housing/homeownership/homeinfopackquestions/ Estate agents - remember they represent, up to a point, the buyer, but most of all simply want a sale at any cost. Making offers below the asking price depends the following, and more which I haven't got time to think of at the mo (sorry): - the popularity of the area (because the locale, good local schools etc.) which affects ability to resell etc. - availability of housing of the type you are looking for in that area - to a smaller degree, time pressures applicable to your move - why are the sellers selling - do they need to sell quickly or can they just sit back and wait for the right price - realistic expectations of the sellers: have they upped the price above that which their house in that area can command - council tax banding - noone wants to pay the full price these days Ask the estate agents some of the above. So you should either take all that into account or just stick your finger in the air and say "I'll take X% off the asking price and see what they say". You can always up your offer, unless someone else wants to buy it and offers more. Are you a good poker player? Solicitors - don't need to be local but sometimes it can make it easier. Most are much of a muchness as they say, some good, some bad. You can't tell til you try them. But get quotes from firms on the internet for an idea of price and remember to check if disbursements (letters, searches, money transfer charges etc) are included in their quote. Whoever you sign up with ensure that their quote is a fixed price because things can arise that weren't expected and you don't want to be slapped with an extra £XXX bill. They'll worry about the contracts but read it anyway, particularly if you end up buying a flat instead read the lease too as it will contain details of liabilities for communal things like exterior decorating, ground rent etc. Read the searches they conduct too so you'll know if in the near future there'll be a new motorway outside your house or if the house is on a flood plain. Surveys (I know you didn't ask but you should think about it) - unless you can afford to pay a few thousand pounds if there's a defect you didn't notice in your excitement first looking at the property, depending on the cost of the property consider not just the valuation survey done for mortgage companies but the home buyer's report (that's what it used to be called anyway). It's part way between a valuation survey where a surveyor goes round at says yeah it's still standing and it's priced below/above/about right to the market and a full structural survey which looks at most stuff in reasonable detail. Me, if I was spending a few hundred thousand on a house I'd get a full survey - you can't always see things like dry rot, problems with roof timbers, etc. nor what it's built on i.e. high levels of clay and in a very dry year you could get subsidence, chalk and you should be laughing Fees - no estate agent fees, mortgage and valuation fees, solicitor's fees, remover's fees (up to you if you use them), connection fees to some services (maybe), buildings insurance - make sure you take it out to coincide with date of exchange of contracts because from that point you're committed to ownership unless you pull out, in which case you'd incur non-complete fees up which could be as much as your deposit on the house. Going home now so someone else can fill in the rest
You're welcome. One other thought that's kind of related. Unless you've collected a lot of household contents already or have nice, generous friends and family it costs a lot, and I mean a lot more than you'd think when you add it all up, to equip a house even with just the bare essentials, unless you sleep and eat on orange boxes, so make sure you keep some money aside to cover that if you don't want to be huddled on the floor wrapped in a blanket heating your soup in a tin over a candle for the first 6 months
On the subject of fees bare in mind your mortgage lender will expect you to have life insurance that will cover the cost of the mortgage. It's all the extras like that which you don't think about that add up.
I know it's encouraged, mortgage paid off for next of kin etc., saves them taking possession and having to sell it etc. i.e. prior to estate wind-up, but is it compulsory now?
no it isnt. bank doesnt care if you have life insurance and nthey cant force it on you. if your buying a house DO NOT EVER buy additional services from them as they charge a fortune. for example we were offered life insurance for £19/month each on a joint policy. quick scan on the web revealed i could get it for around £6/month total on a joint policy. I never took it as both our works offer free life insurance. same went for buildings and contents they wanted £35/month, quick search online same policy £20/month !
Ensure you get a home inspection from a qualified and highly rated inspector. They should take the time to go through everything inside and outside the house with you and take the time to enplane everything to you as they go along. Ensure you ask the realtor what similar houses in the area are going for. If you have children review the schools in the area. How close are amenities, grocery store etc. See how much the previous property taxes were, how much home owner insurance is and if it is added in the escrow or you have to pay it out of your own pocket. How much are you going to need to put down? Ask if the seller is willing to pay for any of the closing cost. That's just a few things I did when I bought my house about a year ago.
It can be a little bit different here in the UK to the US I.e. "property taxes" are fixed banded and only increase if the local council increases it and then it affects all properties in that band controlled by that council whether sited on top of a hill in the middle of nowhere or in the middle of town, unlike the US which can have multiple taxes (city limits etc. I think - my brother lived in Michigan for a few years and had to pay 2 taxes because of the location of the house). Of course if they ever do go to full revaluation of properties and base it on that valuation, rather than bands from the 1970s/80s/90s (I forget when it was last done) there will be a lot of people paying a lot more in council property tax. Insurance is never included in "escrow" here. It always has to be obtained by the purchaser themselves, even if the finance company insists they use their insurance products (although I don't think they're allowed to do that any more). And surveys here should always be carried out by qualified Chartered surveyors, often by the surveyor appointed by the financing company which requires a valuation anyway. That way their scaled surveys, home buyer or full, should work out a little cheaper than paying for your own surveyor in addition to the valuing surveyor. Mind you "full" survey is somewhat of a misnomer as they will only survey what they can get at but should raise concerns if they have them when they can't actually inspect fully i.e. if they suspect wet rot has allowed dry rot to take hold they can't rip the plaster off the walls to check
I'm pretty sure it was a stipulation for our first mortgage or certainly gave you more choices to choose from when we bought our first flat. We were an unmarried couple buying together and my partner earns significantly more than I do so that may have been the reason. Oh and it was a Northern Rock 120% mortgage too. Also I am talking about life insurance that happens to cover the total mortgage amount, not mortgage life assurance. Anyways I would never buy anything additional provided by the lender. I always shop around and see what our financial advisor thinks. Again bear in mind our house selling process is very different north of the border as it is entirely handled by solicitors..
With our mortgage it's not complusory, however they would expect the mortgage to be paid off if one or both of us died and we knew that we wouldn't be able to do this on just one salary. Our life assurance (it's not insurance) costs us a fixed £9.32 a month (in total, not each) which pays a fixed sum (more than the mortgage) and expires after 25 years (when the mortgage is paid off). I sorted it through Cavendish (the policy's actually with L&G) after reading about them on moneysavingexpert.com - I cannot recommend that site highly enough...
