Top 10 common mistakes first time buyers make.
So here they are the top 10 mistakes that first time buyers make and how to avoid them.
1. Not having outside space or parking.
I know this isn’t always possible, some inner-city locations just don’t have outside space or parking. But outside space for socialising or just drying washing is so important. One of the most common reason for moving home is needing outside space or parking. It costs a lot to buy your first home, maximising the length of time you are there is important. And when you come to sell the property, new buyers will also be looking to tick these boxes.
2. Not saving enough deposit.
First time buyer mortgage lenders will offer you better interest rates based on deposit size. This is usually based on percentage thresh holds. For example, if you have a deposit equal to 5% of the purchase price, a lender may offer you an interest rate of 4%. But if you have a deposit equal to 10% of the purchase price then a lender may offer to an interest rate of 3%.
So, the bigger the deposit the cheaper the interest rate will be. Getting advice on these thresholds and the best way to save for a deposit is important at the start of the journey to your first home.
3. Not viewing enough properties.
This is a big investment and you want to get it right. Location is very important but so is the feel of the property, the street scene and your potential neighbours.
You need to view as many properties as you can to get a feel for the market and pricing, so you can make an informed decision on the right property for you.
4. Buying a property with a short lease.
Buying a leasehold property isn’t as straight forward as buying a freehold property. Typically, most houses are freehold and most flats or apartments are leasehold.
When considering a leasehold property you should ask for the length of the lease, who the freeholders is and a list of all the fees and charges.
First time buyer mortgage lenders will take the length of the lease and monthly fee’s into account when you apply for a mortgage. If the lease is less than 70 years, the lender may not lend on the property or suggest a lower purchase price. This is because there is a cost to extend the lease which could be anywhere from £5,000 to £25,000. Fees and charges relating to the lease may also be deducted from the maximum loan you can obtain.
If the lease on the property you are interested in is less than 90 years you should consider making a lower offer based on your future potential costs.
5. Not viewing the property more than once.
Once you found a property that you are interest in. Ensure that you view the property another 2 – 3 times to try and spot anything that you have missed the first time. View it at different times of the day and take your parents or friends for a fresh set of eyes.
Ask questions and listen to other points of view. This is a big decision and you want to get it right. The estate agent or owner of the property may want to rush you into making an offer but don’t feel pressured. The 2018/2019 housing market is a buyers market and you are in control.
6. Choosing the wrong survey.
Many first time buyer lenders with offer a free valuation of the property that you are buying, and you may be tempted to take this.
This first thing to understand is this isn’t really a survey. It’s the lenders valuation report and it is to assess the suitability of the property for a mortgage. You may or may not receive a copy. There could be things that don’t affect the lenders decision to lend on the property but could end up costing you thousands to rectify months after to move in. Because the report wasn’t instructed by you there would be no come back on the lender or surveyor.
Most lenders will offer you the option of a home buyers report. This will cost you a few hundred pounds extra. You instruct the surveyor directly and will receive a very detailed report on the condition of the property and a recourse if you find anything down the line that was missed.
If you surveyor raises issues that you were not aware when you made an offer you may be able to renegotiate the purchase price.
7. Getting a mortgage through your bank.
So, you are looking for a mortgage?
Where do you start?
At your bank?
Yes! this is a good place to start. You may get lucky and they might have the best rates and offer you the loan that you want. The reality is banks and building societies regularly change their rates and all have different lending criteria. Most importantly they generally don’t offer advice. They will show you their products and let you choose a mortgage on a non-advised basis, so if there are any problem down the line, they are not responsible.
Once you have seen your bank and got a feel for mortgages it best to meet with a mortgage adviser that can show you products from more than one lender and make a recommendation for the best mortgage based on your individual needs.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP THE REPAYMENTS ON YOUR MORTGAGE.
8. Telling the estate agent everything.
The estate agent works for the seller of the property, not you. They may seem nice and appear to be on your side but ultimately, they work for the owner of the property and get paid once the house completes and you move in.
If you tell the estate agent that you really like the house and will pay full price and then a few days later try and negotiate on the price, you may find the seller is holding out for the full price.
Carefully answer any questions the estate agent asks and if you are keen try not to show it.
9. Not fully protecting the mortgage.
Protecting your new mortgage is as important as the mortgage itself. Spending time understanding everything that can go wrong and what you can do to protect against it shouldn’t be put off.
Getting everything in place at the start and budgeting for it means all the what ifs are taken care of.
There are lots of different products available and getting the right advice is vital.
10. Paying full price for the property.
As a first time buyer offering on a property can be tricky. The first thing to do it ask the following questions:
- Full market value of the property in good condition.
- How much work is required to bring the property up to a good standard.
- How long it has been on the market.
Remember when a property goes on the market there will often be a lower price the owner is expecting and the property will be listed at a higher marketing price. Most sellers would like to achieve full price but there is usually some wiggle room.
When you make an offer you should justify your reasons and try not to insult the seller. You are trying to do business with seller and good will goes a long way.
Want to find out more about first time buyer mortgages? check out our first timer buyer FAQ’s