What Do I Need to Know to Become a Home Owner?
A Step on the Ladder
Advice For First-Time Home Buyers
It has become increasingly difficult nowadays for most first-time buyers to take that initial step onto the property ladder. Unless there is a substantial loan or gift from the bank of mum and dad, it's nigh impossible to raise the necessary cash to put down a significant deposit, whatever the asking price. Mortgage lenders often require a 25% deposit and this prices single first-time buyers out of the market. Even young professionals on high salaries find it difficult to move out of the family home. Couples too, fare no better and often discover that renting or shared ownership is the only option until they can save enough hard-earned cash.
Buying a house will be your biggest ever investment, and it's prudent to be wary of the pitfalls. It's always easier to buy than to sell, so think ahead concerning your current employment status. Are you happy to remain in your chosen location for the foreseeable future? If you want to maintain your mobility because of career prospects, it's perhaps wiser to rent. What if you're offered a better-paid job in a more salubrious area only to find that you're unable to sell your existing property at a price that makes the move viable?
Keep a folder for financial documents and important appointments. Being organised and methodical with paperwork will assist you to keep track of the progress of any mortgage applications etc. Mortgage availability is one of the main hurdles to overcome so it's wise to create a good impression with the building society just as you would do with any prospective employer. Any financial institution wants to be sure they will get their money back, so will they be willing to take a chance on you if you don't create a good first impression?
When I first became a homeowner in the early 1980s, lenders were more geared up to the requirements of first-time buyers. I was lucky enough to secure a 100% mortgage on a brand new bungalow. It was carpeted throughout and even came with a first-time buyer's incentive package of cooker, fridge and washer. Free legal costs were also provided; it was a case of move straight in and put the kettle on! There were no repairs, zero maintenance and the bungalow came with a builder's National House Building Council ten year warranty into the bargain. The cost of this scheme was likely included in the purchase price but it meant I could move in with minimum expenditure. I could now take that initial step on the property ladder which would otherwise have taken longer and cost more. The bungalow was well-appointed and running costs were minimal so once I'd made my purchase it was easy to save up for a larger home, a few years down the line when I wanted to start a family.
These schemes should be more prevalent among builders nowadays in order to help first-time buyers secure a rung on the ladder and find a suitable property that doesn't cost a fortune to either purchase or run. Now is the time to buy while prices are cheap in a buyers' market and any prospective first-time purchaser can still negotiate an excellent deal if they choose to buy new. A brand new home will have been built in accordance with the most up to date methods of construction and will feature loft insulation; cavity wall insulation and double glazing to help keep heating costs down. New-build three storey houses are also popular for those wanting a home they can 'grow into'. Properties with solar panels help combat fuel expenditure and reduce carbon footprints and mid-terraced homes will always be cheaper to heat than an end terraced, semi-detached or detached - whatever the source of energy.
In the case of an older type of property, it would be sensible to opt for one that has already been refurbished. Avoid ones that are damp and may need structural alterations even if they appear to be bargains on the surface. Leave houses like this to professional developers as the costs of roof repairs and major building work will be prohibitive unless you are a builder yourself and can easily tackle any problem that arises.
It can be advantageous to take an informed person along with you; perhaps a friend or relative who is a homeowner, landlord or builder. With knowledge only acquired from being a property professional or owner they may spot glaringly obvious drawbacks that might not be so obvious to you.
Stay Within Your Budget, Live Within Your Means
Don't overstretch yourself with the purchase price and then find you are unable to afford the heating and running costs once you have set up home. You don't want to be in a perpetual state of stress from one month to the next wondering how you can pay your bills, so don't make rash decisions when buying a house that provides more space than your immediate requirements. The thought of having an extra bedroom with en-suite facilities may have its attractions but remember it may only be put to use occasionally and you will still have to heat and maintain it all year round. On the other hand, you could consider letting such a room, if household running costs prove too high but many first time buyers may view this as too much of a compromise to their privacy. Letting a room can relieve part of the burden from bills if there is another guaranteed source of income at the end of the month, so buying a house complete with a loft room and its own en-suite facilities could work to your advantage in this instance.
When buying a used home, ask the vendor to provide you with a breakdown of the annual running costs so you can assess whether a property will be affordable to run. Don't forget to add to the purchase price the costs of legal and brokers fees etc. Find out the council tax band where your prospective purchase is located and phone the local authority to see what your annual payment will be. Investigate the possibility of installing a water meter; if only one or two persons will be living at the property it may be far more economical than paying a set amount each billing period.
Find the cheapest utility providers for your chosen area and work out exactly how much cash must be allocated each month before you can even think about putting bread on the table.
Work out a budget and stay within the boundaries of what you know is affordable. What will your travelling costs be to and from work, to the supermarket and the nearest town? Is there still some leeway if your income falls or if mortgage costs increase? Get as much professional advice as you can in order to find the best all round deal. Don't forget, you'll still need money to set aside for a few little luxuries and you'll soon come to resent being a homeowner if you deny yourself those occasional well-deserved treats that make life enjoyable.
'Location, Location, Location'
Don't 'let your heart rule your head,' when viewing a property that appeals.The location is of equal importance to the house itself and there are significant factors to consider.
Whatever the property is like and wherever it is, always arm yourself with a map of the area you desire and view all the properties that are within your budget. Estate agents will be eager for your business and will fall over themselves to help you in your quest for an ideal home. Internet property websites are invaluable and can enable you to conduct an intensive search for your desired location at the touch of a button. Aerial views and maps of main arterial roads can help you consider the plus points and downsides of any location. You'll soon discover a wealth of information that allows you to make a fair judgement of your prospective purchase. You can also find out what houses sold for in your chosen area which will give you a genuine indication as to whether the asking price is realistic.
Is there a reasonable range of shops nearby? Can you cope if the property is not on a bus route? What about medical centres and schools? You're not a tourist researching a location for a fortnight's annual vacation; you're going to be there for the foreseeable future. See any nagging doubts as positive - they may prevent you from making a serious mistake.
A tape measure is always handy to take along to any viewing as empty properties can be deceiving. I once ordered a huge, clumsy sofa for a tiny lounge, so my husband had to return to the house to measure up, to convince me that it wasn't going to fit! It's wise to opt for a second viewing to pinpoint certain aspects of the property you may have overlooked first time round. Don't be afraid to ask any relevant questions.
Remember wherever you choose to buy and however long you decide to stay there, you now have a place to call your own. Shut the door, close the curtains, sit down on the sofa and relax - you've earned it. Then you can look forward to turning your house into a real home.
Questions First-Time Buyers Might Ask (UK)
Questions First-Time Buyers Might Ask (USA)
© 2015 Stella Kaye