The (Good and Bad) Essentials of Buying a Property
Property ownership is a wonderful thing, and so is hindsight. If you’re new to home buying in the UK, start by taking off those rose-tinted glasses and researching the drawbacks, loopholes and hidden nasties of buying before diving in headfirst. From gearing up for realistic expectations to understanding the importance of lenders’ timings, our quick and easy checklist to buying a home in the UK will help reduce your homebuyer anxiety.
Keep an open mind. Few of us are lucky enough to be able to make the first property purchase a dream one. It helps to keep an open, and realistic, mind about buying your first home, and understand that this first investment needn’t be ‘til death do you apart. If, however, you’re set on making this purchase a lasting one, remember that you can always renovate to add an extension to your property, or simply spruce it up with a bit of repainting. Seeing the bigger picture means you’re less likely to fall into the ‘but it needs to be perfect’ mind trap.
Think about securing an agreement on principle. According to leading mortgage advisor Coreco, it is a good idea to secure an Agreement in Principle because it “will confirm in writing how much a lender will be prepared to lend you, subject to a full mortgage application and underwriting.” You can get an AiP online if you’re buying a property or remortgaging your home - it normally takes about 20 minutes.
Do your homework and get organised. Prepare for your mortgage application by making sure all your documents are in order. Lenders like to see three years’ worth of accounts, three months’ worth of bank statements and details of any loans and credit cards you may have. It’s also a good idea to know what your credit score is and the maximum deposit you’re able to put down on a home.
Mind the lease length. If you’re looking to buy in London, chances are the property will be on a leasehold. Leasehold is a feudal form of tenure unique to England and Wales, which essentially means you have a lease from the freeholder (aka the landlord) to use the home for a number of years. The leases are usually long-term, but lately, there’s been an increase in short-term leases of 20 to 25 years. It may seem like a technicality, but the truth is that lease length is important, and it’s worth seeking professional advice on what is best suited for your financial situation and family before jumping into a decision.
Be aware of the timings. Allow plenty of time for your mortgage offer. While every deal is unique, we suggest you be prepared for the transaction to take between 4- 6 weeks. However, if your application is more complex - for example, if you are self-employed or are not a resident of the EU, you can expect it to take longer.
Keep in mind the cost of buying. Along with the mortgage comes the actual cost of buying. Fees can run into the thousands, plus, you’ll probably have to pay for stamp duty too. You can take a look at how much stamp duty you may be expected to pay here, For comprehensive guide land registry fees, home insurance costs and the rest, check out this property buying guide by Zoopla.
A mortgage broker can be a great help. It’s worth looking at working with a broker, as they can ease the strain of the arduous home buying process. A mortgage broker will give you their expert opinion on which is the best mortgage for you in terms of the interest rate and likelihood of your application being accepted. "Good brokers will be aware of which lenders have bear traps and what they are, thus in most cases avoid wasting time by applying to a lender whose criteria on the face of it the applicant appear to meet, but because of the small print somewhere the application would get rejected," explains Ray Boulger, senior technical manager at mortgage broker John Charcol.
Credit image: Unsplash / Evelyn Paris.