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How To: Buying a Home

How To: Buying a Home

The Government has been using Quantative Easing to put cash into the hands of the banks and building societies. In turn the banks and building societies are now in a position to lend money to home purchasers which should see the decline of huge deposit requirements for first time buyers.

As a potential first time buyer the initial question to ask is whether home ownership is desirable in the short-term. A 25 or 30 year commitment should not be entered into frivolously and reasonable financial security should be the first starting point. No-one really knows what will happen to property prices and mortgage rates over the medium and long-term.

The best mortgage interest rates are available to those that have a decent deposit. A deposit of 20 – 25% will have the banks and building societies clamouring for your business and so the best deals can be struck if you have a £25,000+ deposit available. Perhaps your parents are in a position to assist – it is certainly worth asking the question.

It is also important to factor in the less obvious costs associated with the purchase of a home. These include a Mortgage Arrangement Fee of about £1,000, Surveys of about £500, Valuation Fees of about £250, Stamp Duty on a property over £125,000, Legal Fees of about £400, Removal Costs of around £300 plus any repairs and furniture that are needed ion your new home. These ‘hidden’ costs of buying your first home can easily exceed £5,000 if you are not careful and are unlikely to be less than £2,000 for the savvy buyer. It is also worth realising that from the decision to buy through to actual home ownership is a lengthy process and will take a minimum of 3 months from start to finish, with 6 – 9 months more typical.

Even without a home to purchase it is worth approaching mortgage lenders to see what mortgage they can offer in principle. At least this will put you in the right ballpark when looking at a house to buy. A change of attitude is required by many who feel that they have to go cap in hand begging for money. The truth is that they want your business, you are the lifeblood of their business so compare offers and let them know that you are shopping around for the best deal.

Local Estate Agents are the obvious place to start your search but a couple of search sites worth spending time with are Rightmove and Home.co.uk.

Once you have found a possible home do not be afraid to ask question. Ask how long the property has been on the market and how many viewings and offers it has had. Find out if there is a chain involved and why the vendors are moving and how long they have lived there. Discover what is included in the sale and whether there are any parking issues. Find out what the council tax band is for the property.

When viewing multiple properties it is easy for the houses to blur into one. Take pictures. View your favourite properties in the daylight (easier to spot possible problems) and in the evening (to learn more about the neighbours).

There are many things to look for when viewing but here are a few suggestions, some major and some more minor. Look for damp (mould, peeling wallpaper, window condensation), check the ceiling for cracks and brown water stains, check that all doors and windows open and shut properly, check the switches, inspect the plumbing, check the heat from the central heating and hot water tap, check mobile phone signal strength, look under rugs and mats for stains, check the attic, glance at the houses next door and, finally, check the vendor to gauge whether they appear trustworthy.

There are many factors to consider before making an offer but often the offer can be up to 10% lower than the asking price. Make your offer on the condition that the vendor takes the property off the market to avoid gazumping.

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