First Time Buyers - How to Buy a House
Step by Step Guide and Advice on Buying a First Home
Dec 19, 2008
The housing market can be a bewildering place for those who have never purchased property before, even those who are pretty financially astute. The credit crunch/sub-prime lending crisis has done nothing to ease the confusion. On the one hand many first time buyers are finding opportunities to get on the property ladder with house prices falling significantly. On the other, the dangers of going into negative equity or making an unwise choice of property are off-putting to some new purchasers. Buying a home is a major commitment. Follow these steps to ensure it’s not one that will soon be regretted.
Work out a Budget and Decide What Sort of Property is Needed
If potential buyers are in steady employment, have a decent credit score and have a deposit to put down (more than 25% of the value of the property will help), they should be able to obtain a mortgage. Typically, expect to be able to borrow 4 times a single annual income, or 3 times a combined income if buying with someone, though this may vary according to the individual. A mortgage broker will help buyers finetune their budgets later on.
Don’t be tempted to borrow more than can be comfortably afforded. In times of economic uncertainty it is wise to have a cushion to allow for potential increases in the cost of living, such as food and fuel prices. The amount available for borrowing, plus deposit money, less anything needed for furnishing, renovation and decoration, and less solicitor’s fees and charges (call a local, preferably recommended solicitor to get an idea of what these may be), makes up the total house-hunting budget.
Consider putting off the house purchase. Prices look set to fall further in 2009 (BBC News), buy now and a new home could drop in value. However if it's necessary to buy now, or buyers know they can stay in the new home until prices recover, then go for it. Increasingly there are bargains to be had in the market.
What kind of property is needed? How many bedrooms should it have? Is outside space, or secure parking a necessity? Ask questions, make a wishlist and decide what points of the specification are essential, which are desirable and which are luxuries.
Start House-hunting, Search for Properties Online, Arrange Viewings
Approach agents and sign up for their mailing lists. Look at listings in the property pages of local newspapers. Look online: the two biggest property websites in the UK are Rightmove and Prime Location. Buyers should sign up for updates and keep their eyes peeled for ‘For Sale’ signs.
When potential properties are found, arrange viewings, preferably in daylight. See as many properties as possible that fit the specification. Take someone along for a second opinion. Get a feel for the property and on arriving home make a list of the pros and cons. If it still seems viable, go back for a second viewing at a different time of day, and use the opportunity to view the property in practical terms. Will the property suit its new owner's needs? What might need changing? What works? What doesn’t?
Think Location, Location, Location
Consider distances to amenities such as supermarkets, chemists, banks and nightlife. Close is good; too close might be potentially noisy. If looking at a country property it may be preferable to be further away from these things. Good views are always desirable, as are transport links including road access, public transport services. Local schools might be important for many buyers; what catchment area is the property in?
Check whether the property is on a flood plain by checking with the Environment Agency. If it is it’s not necessarily a huge deal, but buyers are likely to have to pay higher insurance premiums and may run the risk of the inconvenience and upset caused by flooding. Same goes for crime rates, research potential neighbourhoods. Not everyone will be able to find their dream home in a low crime, flood free, perfectly located area, but buyers should aim to buy in the very best location that their budget will allow.
Up and coming areas can be a good way to get a good location at a lower price. Look out for signs of re-generation and re-development that are the signs of an up and coming area. Lots of building developments (particularly residential ones), new shopping malls, new trendy bars and restaurants, and lots of home renovations (signs include skips, scaffolding and tradesmen’s vehicles outside residential properties) are all typical signs of these areas.
Thorough research into potential and desirable locations before househunting in earnest will allow buyers to target the most suitable areas and get a property with a fantastic location, which will offer the best opportunities for retaining value and potential for resale.
Check the Property
Whether buyers are looking for a studio flat or a mansion house, they need to make sure the property is structurally sound. This will be checked more thoroughly at the survey stage which happens later, but buyers can look for key signs of damage or structural anomalies from the very first viewing. When viewing the property look out for large cracks (particularly diagonal ones), damp, and roof damage. These could indicate serious problems.
Look at properties that are within budget and slightly above, since often vendors accept offers below the asking price. Aim to find a property that will suit for at least the next 5 years, since buyers could lose money on the property if they should have to sell while house prices are still falling.
When the perfect property has been found, buyers are ready to make an offer. Readers may wish to find out more by reading First Time Buyers - Making an Offer.
Readers who have already made an offer on a property may beinterested to read about seeing a purchase through to exchange and completion.
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