Betty’s sister (having rented for a few years) is thinking of buying a house – and she asked us how to go about it – we didn’t really have any ideas what to do – everyone that we knew who had bought a house had done it a long time ago, and everything’s so different now! There are constantly articles in the UK news about the way that it’s getting harder and harder for first time buyers to get on the property market at all, and largely it’s down to putting down a good deposit, nobody seems to be able to afford to any more! Luckily between us we make a decent(ish) wage and we were in a position where saving wasn’t too difficult as our rent from parents wasn’t too high… but other than that – where do you start? We probably didn’t really do things in quite the right order… here’s how it should have gone:
- Decide you want to buy a house – woo hoo!
- Start saving! You will need at least ten percent deposit, and calculate in what you estimate your legal fees will be as well as the cost of moving/any money you might want to spend on the house before you move in.
- It’s a good idea to shop around to see which banks and building societies are doing the best rates and offers
– a mortgage adisor can help you out with this, generally most estate agents will have a mortgage advisor, or see an independant advisor. One bonus of going with a larger company or the estate agent is that they will have the larger banks on their books wheras a smaller agent isn’t as likely to. They will be able to tell you which companies will be able to offer you a mortgage full stop, some won’t depending on your credit rating, some are a little more lenient – we were pretty lucky on this front as our rating isn’t too bad other than a couple of personal loans (car, etc). Crucially they will also be able to tell you what your maximum amount would be that you could borrow, and what your monthly repayments will be. Remember to calculate your other bills into your monthly outgoings – and leave yourself some extras! You never know when there’s going to be an unexpected cost to pay.
- Get a mortage in principal from the bank, you’ll be able to finalise the details later – this is something that we did after we made the offer, and it really slowed things down for us. Your vendor and estate agent will need to know that you have the money before they can accept any offer that you make.
- Now that you know how much money you can borrow, and have a deposit saved up then it’s time to start looking! You might have been vaguely shopping around before, but start viewing properties – don’t be afraid to go a little out of your area in terms of comfort zone – we both grew up in quite a ‘nice’ area, which shoots the price of property up dramatically; in the beginning we were looking between where we both lived before and where Betty works, and for the money we could afford to pay we were getting wrecks, or properties that were just too small for us – scary as it sounds at some point we might start a family, and it’s doubtful that we could afford to move again before that happens. As soon as we starting looking a little outside where we’d originally intended (in an area with a needlessly bad reputation, actually) then we starting viewing houses with a lot more room, and in a lot better condition.
- It’s useful to take people to the viewings with you – Sam has been fantastic, he’s a gas engineer so he could see from that point of view what needed doing, and how much it was going to cost us. Likewise our mate Rich’s dad is a property developer, we took him to the first house we saw (which in the end was too much of a project) and took us through exactly what needed doing and how. It’s worth reading up on obvious signs of problems like damp and movement, as your estate agent isn’t likely to know – at the prices we were looking for most of the properties that we viewed were reposessions, and the information on them was scarce.
- Ask around – we spent a bit of time in the local pubs in the areas we were looking in to quiz the regulars about houses – even if an area is nice, there may be a few streets or estates you’d rather not live in. Next door neighbours are useful to ask if you’ve got the nerve. Don’t forget that your estate agent is obliged to tell you (if you ask) about any neighbour disputes. We almost went for a bit of a project house, three houses on an unadopted road, and the first neighbour told us that the lady who had lived there before had left because she had so many problems with the only other house on the street. Considering the amount of money involved, it’s best to try and avoid any mistakes at that stage.
- So you’ve found a house you want to make an offer on? Great! Make your offer, it’s difficult to gauge whether there’s been any interest in the house – obviously if you ask the agent they’re bound to say that there’s been a bit of interest, or even that there are people thinking of putting in an offer. Mostly if you ask how long it’s been on the market for, they’ll imply that it’s been less time rather than more. There are websites where you can check how long a property has been on the market for, so it’s worth doing a bit of research. You can always offer low, and increase – you can’t offer high and then offer less later. Contact a solicitor, the estate agent will ask you for their details, so they need confirmation that you have legal representation.
- Wait! It’s terrifying, but there’s going to be a bit of a wait before you know if your offer has been accepted. We went in a little low, and were refused the first time, but our second offer was accepted. Luckily we weren’t in any competition with anyone, but we were really on edge in the coming weeks – as it was a repossession, the estate agents needed to advertise that there was an offer on the house, and at what price. Not knowing if someone else was going to counter-offer was really scary, we tried really hard to hurry everyone along so we could complete as quickly as possible. Contact your bank again to confirm the details of your mortgage and to get things rolling.
- Get a survey done – this is the really scary bit. Even if the house looks fine to you, there may be hidden problems. In older houses particularly damp can be a problem that you can’t see – our survey turned up a wood-boring insect infestation in the living-room floor which turned out not to be too expensive. Sometimes you can be cheeky, and go back to the vendor to discuss whether they can pay to get some problems fixed (if they render the house uninhabitable) or if you can lower the price you’re willing to pay. We tried this and they said no straight away – we put such a low offer in that they weren’t prepared to give us any leeway. Our bank offered us two levels of survey – a basic one, where they pretty much do an internet search to find out about the house, and a more expensive one where a surveyor went into the house to check structural damage, damp, roofing etc. It seemed too much of a risk not to go for the more expensive one – it’s a lot of money you’re spending! You can always arrange a survey yourself if you want to go for someone completely impartial.
- Assuming everything’s fine, you’re good to go. Contact your lender again, and your solicitor. Pay the deposit, get the contracts signed. Your solicitor will do their own checks which will tell you about the house, the current owners, the previous occupants (to a point) and the area you’re living in including industrial sites nearby, mining (a huge problem in our area, where mining was a huge industry – subsidence is not fun to get into!) and pollution. Once you’ve signed the contracts, it should take roughly a week to complete, just keep chasing everyone up – we assumed certain things had been done by the bank which hadn’t, again slowing us all down (see previous posts!!) and taking us a lot longer to…
- Get the keys! Congratulations, you’ve just bought a house you poor sods.