Buying a home? 3 expensive mistakes you can avoid
Buying a home is one of the most significant purchases you can make in your life. Putting down roots and building a home speaks to our basic human instincts, so it's easy to get swept away by the excitement and emotion of the journey. Yet in between Rightmove scrolling and cosy home Pinterest boards, there are many practical steps to navigate before you get keys in your hands.
So, if you want to make your next house move as smooth and stress-free as possible, here are three steps to get you on the right path to your dream home.
Know your budget
There are plenty of pieces of the puzzle to work out financially when buying a property but broadly speaking, it comes down to two key factors: how much cash you have and how much you can borrow. The amount of cash you have as a deposit - whether money from your savings or equity in your existing house - will impact your total budget and crucially, your interest rate. The higher the ratio of your cash deposit to mortgage, the lower the interest rate on your mortgage is likely to be.
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In terms of borrowing, speaking to a mortgage broker can give you an accurate idea of how much you could borrow for any prospective purchase. Mortgage brokers have access to a wide range of lending options and crucially, they understand the criteria used by lenders to determine whether or not to approve your mortgage application.
If you have financial circumstances that may be slightly out of the ordinary, whether that’s self-employment or bonuses from your workplace, brokers can support you through the process and help you secure the best deal possible. After all, when you’re borrowing hundreds of thousands of pounds, every penny and pound that you can save will count.
Make a list of priorities
Unless you have an unlimited budget for the latest piece of property you’re adding to your portfolio, there’s a fair chance that you’ll need to make some decisions about what to prioritise and where to compromise in your house hunt.
Depending on your stage of life, your must-haves can look completely different from those of your neighbours. For example, young families may prioritise finding a home with outdoor space for children to play along with local schools and parks; on the other hand, if you need to commute on a regular basis then transport links will be top of the list.
Having a clear distinction between the aspects of your future home that are must-haves and which aspects are nice-to-haves will help direct your search and avoid confusion along the way.
Beware hidden costs
There are hidden costs in buying property that can easily go under the radar and catch you off guard if you don't plan ahead. The legal process of buying a property in the UK can be long-winded and there’s plenty of paperwork to navigate, so it’s essential to understand the process.
Finding a good conveyancer or property solicitor can make the difference between smooth sailing and major stress, so speak to friends or family to get recommendations. Factor in the cost of the legal fees to your budget so you don’t find yourself caught short.
Depending on the value of the property you purchase, you may have a Stamp Duty Land Tax bill to pay too. Stamp Duty is a tax payable if you buy property over a certain value in England or Northern Ireland, and it is calculated as a percentage based on the property value which means that particularly in the South East where property prices are, Stamp Duty can be hugely expensive, so it’s essential to factor in the cash required for the tax to your total budget before you start viewing properties.
If you choose to purchase a period property, it’s likely that a survey will be recommended to ensure you have a full picture of the condition of the property before you commit.
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Surveys provide expert opinion on elements of the property and can act as a negotiation tool, in which case they can be well worth the initial investment required. Surveys can range from high-level overviews to deep dives into specific aspects of the property and can cost anywhere from hundreds to thousands of pounds.
Ellie Austin-Williams is the author of Money Talks, a Lifestyle Guide for financial wellbeing. Find her on Instagram at @thisgirltalksmoney.
