First time buyer advice
How much does it cost to buy a house?
Before you consider buying a house it is very important to work out, as accurately as you can, all the costs involved. These would include not just the day-to-day costs of living in your own home, but everything you would need to find upfront and, of course, the mortgage payments.
To help you work out what you can afford to spend on your dream home, we offer this list of the key items to consider.
What are the upfront costs?
This is the money that you put towards the cost of purchasing your property, the balance of which you pay via a mortgage. In the current market, you will need to find at least 5% of your desired property’s price to secure a mortgage. Beyond this, there is actually no set amount and you can put in as much as you like, depending on your individual requirements.
There are a couple of very good reasons to come up with a bigger deposit:
1. The more money you put towards a house, the less of a risk you pose to a lender. This will mean you have a much wider choice of lenders.
2. The less money you have to borrow, the cheaper your mortgage repayments will be.
This is a tax you must pay In England, Wales and Northern Ireland when buying properties or land above a certain price. Currently, buyers don’t pay stamp duty on the first £125,000. For property between £250,001 and £925,000 buyers pay 2% on the portion of the price between £125,001 and £250,000, then they pay 5% on the portion of the price over £250,001.
Please click the link to our Stamp Duty calculator below for more information and for rates above £925,000.
In Scotland, buyers don’t pay tax on the first £145,000. They pay 2% on the portion of the price between £145,001 and £250,00 and then pay 5% on the portion of the price between £250,001 and £325,000.
A fee the mortgage lender will charge to assess the value of your property – necessary to ascertain how much they are prepared to lend you. There may not be a charge depending on the mortgage type but, assuming there is, it can be between £150 to £1,500.
The costs you will face once you’ve found a property and need to know that it is in good condition before you commit to buy. If you do not commission a survey, you may remain unaware of costly work that needs to be done.
You will need a licenced conveyancer or solicitor to perform the legal work involved in buying a property. They will also conduct local searches.
This will vary hugely depending on the volume and type of goods to be moved, over what distance, and the ease of access both at the start and finish of the journey. Get a number of quotes, but also ask friends/colleagues if they can recommend anyone.
There are literally hundreds of mortgages available and varying product types. We have our own mortgage department, Mortgage Matters Direct, which is one of the largest mortgage specialists in the UK, and can help you, whatever you need to know.
Electronic money-transfer fee
This will typically cost £35-£50, and covers the lender’s cost when they transfer the mortgage money from lender to solicitor.
What are the ongoing costs?
Maintenance and repairs
Separate to any upfront repair costs, you will need to budget for regular upkeep, such as DIY and decorating.
In England and Scotland this is based on your property’s valuation band and whether you are entitled to a discount or not. In Northern Ireland, the tax is based on the individual property.
You will be obliged to take out buildings insurance in order to protect your mortgage lender’s interest in the property. It would also be wise to take out contents insurance to protect your possessions. Although it is something you may not wish to think about, it is not an impossibility that you might die before your loan payments are completed. For your family’s future peace-of-mind, therefore, you may want to consider life cover to ensure that the mortgage is paid off in this eventuality.
It can be a good idea to ask the current homeowner what they spend on their utilities (gas/electric, water) to help you estimate your own costs You should also incorporate telephone line rental and calls, broadband and TV, etc.
Getting a mortgage
To start the whole housebuying process you now need to make an appointment with a financial advisor to discuss the most suitable mortgage and insurance products for you.
Our mortgage department, Mortgage Matters Direct, is one of the largest mortgage specialists in the UK. We specialise in mortgages and mortgage-related protection products and have the knowledge and expertise to offer the best possible deal to suit you.
You may, of course, qualify for the Help to Buy scheme, where you could move with as little as a 5% deposit. Whatever your requirements, you can contact us, safe in the knowledge that we offer mortgages from the whole of the intermediary market, have helpful experts who don’t just work for commission, and can search 1000s of mortgages to find the best deal for you and offer impartial advice.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
How do I find my dream home?
Now you know what you can afford, and which mortgage is best for you, it’s time to start looking for a house!
Write down some of the areas in which you think you might wish to live. If you’re considering an area you don’t know too well, speak to one of our local agents, who can advise on the best areas, and even the most suitable streets to consider to match your requirements.
You can, of course, use our website to register for property alerts. Here, you can specify your requirements regarding property type, how many bedrooms and price, etc.
If you’re really not sure yet on what you may or may not want, it’s always a good idea to just start viewing some properties. You’ll soon develop a better idea of what you like or don’t like, and what elements you can or can’t live without.
Driving past the property
This has more value than you might think. Even before the viewing, a trip to see the property from outside is often sufficient to tell you that the property is not for you. A drive around nearby streets will also give you a feeling for the neighbourhood – and it’s worth doing daytime and night-time to evaluate traffic noise and the like.
Consider all the things that are important to you and about which you want to ask questions, and make a list before you go to view. It can be very easy to forget things once you are inside the property.
Take someone with you
It can be very useful to have a second opinion – and a fresh pair of eyes – and someone else can often spot something that you have missed.
Buying a home is one the biggest purchases you ever make, so no one can object to you being as thorough as possible. Check everything, including inside cupboards and under the sink. If there is a loft or cellar – check those too (and borrow a torch, if necessary). Look out for damp and peeling paint.
Just as you did inside, can you see damp, peeling paint or tide marks on the walls? Does the roof have any loose tiles?
Find out what is included
Find out what fixtures and fittings will be left. You don’t want to move in and find out there are no carpets or curtain poles.
Has any work been done?
Ascertain if there are any modifications and ask for copies of receipts and guarantees.
Don’t forget to be friendly!
You want to stick in the seller’s mind for the right reasons. This will improve your chances at having your offer accepted and can help to smooth the sale as well.
Making an offer
Always consider the following before you commit to an offer:
Are you fully happy with the property and location or do you have doubts?
If you think that the property needs a lot of work and you do not think that this has been refelected in the price, you might consider negotiating. You might also consider this if the property has been on the market a long time.
Let your agent know if any of the following applies to you, as it might make the difference as to whether your offer or someone else’s is accepted:
Your mortgage offer is arranged
You’re a first-time buyer
You’re not in a chain
Your offer is accepted
You will need to apply for your mortgage formally and arrange for the surveys. It is at this point that things move largely to the hands of solicitors for both buyer and seller.
Your solicitor commences the legal process required to transfer the property to you – this is called conveyancing, and includes arranging Stamp Duty, communicating with the Land Registry, transferring the money, and acting as a point of contact between you, the seller and the mortgage lender.
You will then be asked to approve the terms of the sale, including a date for completion, when you can take possession of your new home.
Exchange of Contracts
When contracts are finally exchanged, you are legally bound to buy the property. This is the point at which you will need to put down your deposit.
Welcome to your New Home!
It’s completion day, and time to pick up the keys to your brand new home.