It's one of life's great ironies that buying a house will be the single greatest expense of your entire life, and yet on the strength of a few minutes' viewing, you'll decide whether you're going to move in or not. If you were buying a car, you'd get to test drive it beforehand, you'd open up the glove compartment and the bonnet. You could even order a particular colour and specify an engine size. When buying a house it would be useful if you could invite yourselves round for a video and a curry, but the owners wouldn't be too happy. So, to help you towards your very first home, wise and proudly property-owning members of the h2g2 Community have come up with the very best tips for buying a house.
... has got to be one of the best reasons for tying yourself to a mortgage for the next 25 years.
I've been renting for too long now - paying off someone else's mortgage when I could have been buying my own home. If you don't like something in your own home, you can change it. If you have damp, you can sort it out. Yes, it could cost, but at least you don't have to live with Aspergillus niger growing in your porch for three years to the detriment of your personal health.
Now that's a very good reason. Another is, think of the money you could make.
The price of the house was $60,000. The person that owned it needed out fast. I offered $59,000 with a $6000 rebate. This means at closing, the seller will give me a check for $6000 (that together with my own $6000 will give me the 20% down payment). I plan to rent the house for $700 per month, which, after my payments, taxes, insurance, etc, will pay me $150 per month. After 20 years, I'll get the entire rent plus I'll have a house someone else bought for me! (If it all works out.) All for a $6000 investment.
Though this doesn't work if the letting market is flooded, as is the case in London at the moment. Too many people were lured by the 'buy to let' golden egg... that cracked. That's what happens when you've got aspirations to becoming a property magnate.
Tips for First Time Buyers
Buying your first home can be a pant-wetting experience. So:
Make sure you've got enough cash. Not just for the deposit, but for furniture, soft furnishings, repairs and other sundry wonderments. There's also the surveyors, the solicitors and stamp duty to consider. If you are really stretching to get on the ladder it can be easy to forget that you will probably pay around £500 for conveyancing, and stamp duty is a real pain. In the UK, you have to pay 1% tax on houses between £125,001 and £250,0001, 3% between £250,001 and £500,000, after which it goes up to 4%. If you are buying somewhere in the south east of England this will almost certainly apply to you even if you are a first time buyer.
Try and find a solicitor who has been recommended to you personally. Ask friends and colleagues who have moved recently and try and get the best one you can (not necessarily the most expensive). You should end up with someone that knows exactly what is needed at every stage, but it's surprising how often delays occur. It also helps if you have one that you feel happy going to with any silly question and there'll be plenty of those.
Only move on your own (ie, without a removal firm) if you are very strong and have many good and similarly strong chums. Even if you think you've haven't got much stuff, can you really put everything in one suitcase? Probably not. It's amazing how your possessions don't look like very much when they're spread between the place you're sharing with friends and your mum and dad's. The piano your grannie left you, the flatpack shelves you bought from Ikea and all your electrical goods won't fit into a Peugeot 205, no matter how many trips you make, so, if you do have to do it yourself, at the very least, hire a van. (But more about that in Tips on Moving House.)
Make a checklist of all your priorities including:
- Number of bedrooms
- Local transport links needed
- Garden size
- What's going on in the local community
- Amount of decoration/restoration you're prepared to put up with
- Location, location, location - in fact, have a good walk around the neighbourhood you're thinking of settling in. Those well-spent ten minutes can be very enlightening.
Before you even start looking for a house, sort out your mortgage. You can get a mortgage offer in principle from most lenders without having to make any firm commitment. It's boring, but it has several distinct advantages:
You get it out of the way.
You will not be bothered by estate agents who insist that you see their in-house mortgage advisor.
You know exactly how much you can afford, so you don't miss out on that dream house because you think it's out of your price range.
When you do find the house of your dreams you can put an offer in immediately.
Remember that, as a first-time-buyer, if you have a mortgage arranged you are almost as good as a cash buyer. In an even race for a house, if you are a first-time or cash buyer you will win over someone involved in selling a property, because you won't add to the chain of buyers and sellers.
Spend some time shopping around for mortgages. Independent mortgage advisors are brilliant for giving you an idea of what you can afford. Visit one as soon as you decide you want to buy and they will tell you about the different mortgages on offer and give you some insight into what you can afford. Also remember that the bigger the deposit you can put down, the more options you'll get (but don't use all your available cash). If you manage to have about 20% deposit saved up, you can basically have your pick of any mortgage you want.
Set an upper limit beyond which you will not go - try not to borrow more than three times your salary(ies). If you do, fine, but be aware that interest rates will go up and you may very well be stuffed. At the time of writing the UK had the lowest interest rate for decades. They really have only one direction to go from here and that is up. Consider the size of your repayments if the interest rate goes up by two, three, five per cent or more. If you really are stretching yourself to buy a place, you could be in trouble very, very quickly. Capped and fixed rate mortgages do protect against this a little, so you can plan on paying a definite amount for a set period of time.
Also remember that the value of your house can go down as well as up. The mortgage deals being offered now are slightly reminiscent of the excesses that preceded the last property price correction, circa 1988, after which the terms 'negative equity' and 'repossession' appear to have been invented.
Before you get a mortgage take a look at a future value of money chart, and see how much you'll pay over the life of a mortgage.
In our case, we would have paid roughly three times the principal amount over a 25-year mortgage. How do you ever get a return on investment there? It's a fool's game.
Once you've taken all these factors into consideration, and if you're still set on buying your very own bijou pad, you can get on with the exciting bit...
Looking at Houses
Keep on looking until you find a house that meets all your priorities. Once you find a place that comes close, go and view it at least three times, on different days and at different times. What looks like a quiet residential street may be a busy short cut during rush hour. As well as visiting the house on different days and different times, try to make sure you see it under different weather conditions. Many houses look lovely in the sunshine, but an area can look a real dump in bad weather.
Going to see a house three times is all very well, but in some areas, where property is scarce, houses don't stay on the market for very long, so you may have to get going quickly.
I went to see a place the second day it was back on the market, and really, really liked it. I was going to make an offer there and then, but caution prevailed and I asked to come and see it again two days later (and in the evening) but they had already accepted an offer by then. The place I bought is probably less nice, but slightly better located and a lot cheaper, so I have no complaints.
One of your first things you'll notice about a property is the interior decor. Don't let vile wallpaper put you off. Try and imagine all the rooms you look at as being empty and nicely decorated. It only takes an hour or so to slap some new paint on the walls. Remember that you can probably live with polestyrine tiles on the ceiling for a few months, but can you really put up with a tiny kitchen, no matter how new and trendy the units may be?
Second opinions are invaluable, so take as many people with you as possible. Including your children (they'll feel more at home when you do move in). The more eyes looking for problems the better. If the sellers object, they obviously have something to hide. In fact, if you get a chance, talk to the vendors. Be nosey and find out why they are selling. Ask what the neighbours are like. Quiz them about aspects of the house they don't like. You'll be surprised how honest most people are. If you're a rather shy sort, take along a cheeky friend who's prepared to ask questions on your behalf and brief them with a list of questions beforehand.
We took my father-in-law along with us. He's an affable chap you can imagine talking about things like lawnmowers and the local garden centre with his own neighbours. He was great. He took it upon himself to go and knock on our new, potential neighbours' doors to see what they were like. He asked if the school that backs on to the property was a problem. (It used to have a horrible reputation, but not any more according to the lady down the road.) How was the traffic in the mornings? Was the parking all right? It's an excellent tactic if you're a nosey person who can get away with it!
When you're in the process of looking for a house people are bound by the laws of property ownership to give you a knowing look and say, 'You just know, don't you?' When you're a first time buyer, just how do you know? It's sometimes a temptation to buy one that is just okay. Use the force and don't buy anywhere you're not really enthusiastic about. Can you picture it feeling like home, or is it just non-dreadful with no obvious flaws? Here's what one lucky Researcher has to say:
It was a stormy, rainy Saturday afternoon, my husband was sleeping and I was driving about in our very small town in rural Ontario, Canada, when I came upon the house on the waterfront, hidden by an overgrowth of shrubs, vines and trees. I sped home, got him out of bed, called the realtor and within one hour, an offer was called in. We had previously talked about criteria for a home and had established a check list. Brick is the only thing that matched this list. Our house is 130 years old (old by Canadian standards). We have a 30-year plan to fix it up. What I'm trying to say, is that if it feels right, buy it. Your intuition is usually right.
Finally, make sure the resident wants to sell.
I have looked round a property where the elderly female owner was selling because her son thought it would be a good idea. She evidently didn't agree and had no intention of actually leaving.
A List of Things to Consider
A house may suit you in terms of size, location, number of rooms and price, but there are a number of other factors to consider that, to some degree or other, will have an impact on your life. Some of the following may not put you off buying a house, but will help you with the practicalities of actually living in a property and will get you thinking about future budgeting.
Think carefully about buying somewhere that needs a lot of work, even if you believe you'll get more for your money overall. A house that is run down will take up a lot of your spare time: in the evenings when you're tired and at the weekends when you would rather be doing something else.
In some areas it's very hard to find good builders. You might want to get a date out of them before you've actually brought the house, as some of them are booked up for months ahead. Again, only go on personal recommendations and make sure they're attached to a proper guild or similar organisation.
Taking a cautious approach and buying somewhere that is newly decorated may be sensible, but creating your ideal home from scratch is very satisfying and you'll end up with something that you'll truly be able to call your own. If you are prepared to slum it for a few years, you may very well be able to afford your dream home at your very first try.
Budget for any major essential repairs and rewiring. Look into the potential of extending the house or incorporating changes as, if your house is listed, you may encounter problems. If you live in a terrace, are you likely to be able to afford the house next door in the medium term as a way of expanding your space?
In fact, do you need to buy a house at all? Would you consider buying a plot of land to build a house on, as one Researcher did?
I bought my 17 acres in Grey County before the 'for sale' sign went up. We threw away all the house plans we had sketched out and built something totally different. The lot just sort of dictated it. That was ten years ago and I don't regret it.
Unfortunately, major work can sometimes be unexpected...
I have a close friend who has been stung for over £1000 to repair the water mains because her house is an end of terrace and the pipes serve four other houses. I'd suggest that you ask the surveyor to check out the underground boundaries of the property you are interested in. If the pipes have been there a long time then don't buy it. Or at least make sure you are not liable in this way if any underground utilities go wrong.
The Sun. No, not the British so-called newspaper, that big shiny yellow thing in the sky. You can change many things about a house - decor, number of rooms, layout of the garden. But you cannot change where the sun rises and sets. So if you want a back garden that is sunny in the evenings, or if you don't like the early morning sunlight waking you up, check where the Sun is or would be at various times of day.
Plumbing and Wiring
If the house has central heating, check the boiler for age. Older ones are generally bigger and less efficient, and replacing them can cost a lot of money. Ask how often it has been serviced. Check whether the heating and hot water can be controlled separately. Does it take a long time to run a bath? Is there enough water for all the family in the mornings? The same stringent checklist goes for a property's electrics. When was the house last re-wired and who did it? (Ie, was it done by a qualified electrician or somebody doing DIY?) If the cooker is electric, has it been installed properly?
According to one Researcher, never, ever, ever buy a leasehold property.
I didn't really grasp the full implications of having a leasehold flat when I bought it, and less than two years later I have been hit with a massive bill that I can do nothing about.
I have discovered that I have very little protection from the freeholder making arbitrary decisions that affect my life - I am soon going to have to cough up £7000 because of some roofing work that includes improvements and building decoration, rather than just straight repairs. It is very acrimonious and the residents' association is fighting some of the charges. It is so stressful and just makes me angry every time I have to think about it. At least I am not in the position that many of the elderly residents find themselves in - with £7000 to find and no way of raising a loan given their pension income. It is horrid.
Remember, too, that a leasehold property is yours for a fixed period of time. When the lease period is up, the property goes back to the freeholder or you'll have to find the money to extend the period of the lease. This is important to remember if the time left on the lease is short. Even if you don't have to find vast sums of cash, you may have trouble reselling the property.
However, avoiding a lease is easier said than done when buying a flat in London where a one-bedroom flat will cost you upwards of £100,000. So, if you do buy a leasehold property, read the lease very carefully, make sure you get full surveys done and ensure that your solicitor is on the ball where leases are concerned. Make sure you are aware of any proposed major works on the building, including anything that has been done recently. Are there regular upkeep charges? What is the position if the freeholder decides to do building work such as adding another storey to the block? Is there a history of planning applications for the block? Is there any possibility of buying out the freeholder? Questions like these will hopefully protect you from any unexpected nastiness.
Beware the Tyneside Flat Agreement
The what? This is a very bizarre arrangement whereby both the upper and lower flats are bought leasehold but the upper flat owns the freehold for the lower flat and the lower flat owns the freehold for the upper flat. It was apparently dreamt up by an estate agent back in the 1970s.
The rent is 'peppercorn' which appears to be a valid amount to put on your mortgage application, basically neither owner pays anything.
This is most confusing for everyone concerned and particular to the north east of England. It can also make buying one of these flats difficult if the solicitor you're using is unfamiliar with this quirky procedure. However, it's all worth it in the end, as both flats are jointly responsible for the building and there's no nasty landlord to raise rent or make major alterations to building.
Dealing with Estate Agents
Estate agents are the interface between you and the seller at one end, and you and the buyer at the other. Much maligned, some of them have a poor reputation, and are apparently guilty of everything from threats to withdraw the house from the market at the eleventh hour to lining up several buyers simultaneously on the same property. There was a time when estate agents' particulars didn't have to be mildly more accurate than the six-month weather forecast, so a 'part-timber shed' would turn out to be a part of a timber shed, likewise the 'part glazed door to rear'. And, of course, gazumping is not unknown...
When I bought my first home the vendor told me on the completion date that his estate agent had suggested remarketing the house to get another 2000 quid, but that he had refused because he needed to move quickly. I was furious, but of course, when it came time to sell I chose that same agent to do the job!
The same rule applies to them as it does for finding a solicitor or a builder. Ask around for good ones. It's also a good idea to establish a personal rapport with them. If they like you and you make them very aware that you're a serious buyer, you'll get the details on new properties first. Phone everywhere at least once a week. And tell them you want to move quickly. Although rapport building is a good idea, remember that the estate agent is working for the seller, not for you.
Putting an Offer In
You're sure that the property you've seen is perfect. You've checked that the time scales the vendor has in mind fit in with your own, the chain's not too long and the sellers have already found a property to buy. All you need to do now is make that offer.
One Researcher advised:
Never offer round figures, always go one or two more (if the worst comes to the worst beg that extra two pounds from the street). Everyone seems to offer round figures, but that extra little bit may be what gets you the place. It did for me. The feeling when you get it, by less than a fiver makes your day.
Your Offer Has Been Accepted, What Next?
Relax. Take the completion time given to you by your solicitor and then multiply it by between one-and-a-half and two times to get a realistic figure. Buying a house is fraught with delays:
I just discovered that owing to time taken with references and so on our house move is now delayed by another four weeks. Argh! Never underestimate the time it takes for your employers to send in references to the mortgage company.
In the England and Wales an accepted offer is not legally binding, but in Scotland it is. Unfortunately there's still a chance that the deal could fall through because the vendors have decided they don't want to move to the Bahamas after all, the survey shows there's subsidence or your chain is long and someone further up pulls out. If you lose your property in this way, it's very disappointing and if you've commissioned a survey, you may even have lost some money. Try not to think about it too much and start looking again. There are even advantages - the experience may re-focus you on a different style, price or location.
But if Reading this Entry Has Put You Off the Whole Idea...
...don't buy. Houses are expensive to maintain, need decorating regularly, and are sometimes hard to sell (depending on where you live). Rent instead. Or get a good tent and live in a field. Or don't rent, don't get a tent, move in with someone who's already got a house instead. Even if you split up with them, you still get half.
Now this is getting silly.
Related BBC Links
Find out all about the financial side of buying a house.
Are first time buyers being priced out of the UK Property Market?