Buying a house is a huge deal. Home ownership is declining amongst the younger generation and there’s good reason for it. When buying a home, it takes years to save enough money for a deposit – and even then, you’ll be committing to a mortgage for many years!
It’s also a very complicated and long process, but there are 5 things you should know when buying a house.
1) Don’t be afraid to offer low
At the moment we’re going through a recession and a global pandemic. Although house prices are looking good – certain incentives are about to expire. The main one at the moment is the stamp duty holiday. Given that it takes many months for a house to complete, don’t be afraid to throw in a low-ball offer. Sellers will be keen to sell as soon as possible – given demand will slow down as we approach this deadline.
The other force at play at the moment is the end of the Furlough Scheme here in the UK. This currently has a few months left and could leave the economy in a very poor position. Therefore, when it comes to an initial offer, don’t be afraid to offer 10-15% under asking, especially as we get closer to April.
2) Consider delaying
This one is a bit more controversial, as it will depend on your current living situation and you could miss out on the next big increase in house prices.
At the moment there is a lot of uncertainty in the market. Therefore, it may be worth waiting until after the current incentives finish. This may allow us to have access to a more panicked and volatile market, where low offers are more likely to be accepted.
However, when delaying, consider the following:
· How sure are you that house prices will go down?
After a period of uncertainty, when prices stabilise they often head North very quickly, therefore, by waiting you may miss the best opportunity to buy.
· What is your current living situation?
If you are renting at the moment – waiting some extra months may cost you £2,000 - £3,000. Therefore, ask yourself if you will save more than the rent you would otherwise save by moving earlier.
· How likely are schemes to be extended?
Your whole plan to buy later may go up in flames if the schemes are extended – putting you in a worse financial position.
3) Surveys
Surveys are one of these things that could really pay off, but cost a lot initially. When purchasing a home, you’ll be able to instruct a surveyor to inspect a property prior to exchange and completion.
There are a few things to consider before instructing a survey, like:
· How old is the property?
If the property is less than 10 years old – it may still be covered by a new home warranty, this should give you some peace of mind in that if anything is wrong – it will likely be repaired free of charge by the warranty provider. This is because new home warranties tend to last for 10 years in the UK. Also, the type of survey may depend on the age of the property.
· How much is the property?
The more expensive a house, the more costly putting things right will cost, and therefore, the more important it is to get a survey done. This will give you peace of mind that nothing is wrong with the property.
· Have comparable properties had issues in the area?
This is something that could save you the most time and money. Don’t be afraid to ask neighbours with similar homes if they’ve experienced any issues, especially for terraced homes that are built almost identically.
There are 3 main types of survey:
· Condition Report – This is the best option for newer and more standard homes. It will let you know of anything majorly wrong with the property and can cost anything from £400 up to £800.
· RICS Homebuyer Report – This is a survey that details everything important to do with your house, and uses a traffic light system to report back to you. This is quite a thorough report and should highlight any significant issues. This is probably the best option for slightly older homes and can cost £500 - £1,000.
· RICS Building Survey – This is the most detailed survey and is a really good option for peace of mind when purchasing an older property or one where significant renovation works are intended. It’s also the costliest and can cost in excess of £1,000. Though for smaller homes this could come in at £500.
I definitely recommend purchasing the appropriate survey for the house. For any building over 50 years old, it’s definitely worth purchasing the RICS Building Survey – as they will likely find some costly issues that could set you back lots of money.
The surveys usually highlight works that will allow you to adjust your house offer by the amount needed to carry out the works – this is usually provided in the RICS Building Survey, but be sure to ask!
4) Use a mortgage broker
It’s easy to find mortgages online, especially now with comparison sites giving you a good idea of the going rates. However, one thing that many are unaware of is that brokers often have access to separate rates.
Another common misunderstanding is that many think you have to pay a broker for their advice and access to their mortgages. However, this isn’t the case. Many mortgage brokers offer a fee-free service – so the cost to you is nothing. You may be wondering, how can they offer this service free of charge? Well, they get paid by the mortgage provider when you take out the loan. This is often enough to cover the cost of advising you and bag a significant profit.
5) Negotiate fixtures and fittings
When negotiating a price of a property – the two sides often reach a stalemate. Let’s say you guys are £1,000 off for agreeing a deal. If you’re to budge on your side – it may be worth asking the seller to sweeten the deal. This could include things like:
· Ensuring the property is professionally cleaned prior to moving in
· Asking for extra key fobs or gate keys in flatted developments
· Negotiating for the furniture to remain
· Negotiating for the light fittings to remain
· Negotiating white goods
All of these items could total in excess of £1,000 – so you may end up getting a steal. On top of that – it makes the moving process easier for both sides, especially if it’s a sale from a Landlord.
All of these things are important to consider when purchasing a property – and could make it cheaper for you in the long term!
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