Around 14 months ago, my partner and I bought our first home together.
The process was quite demanding and if I’d had a resource of information about what to expect, it would have been really helpful. So if you plan on buying a house anytime soon, here’s what I’d say to you:
1. Be Honest With Your Partner
You are about to invest in potentially the biggest financial commitment of your life. Sounds scary, huh? IT IS. But it’s also really exciting. The first thing we did was talk about what we wanted. Really talked. Not just ‘that looks great!’ or ‘I like new builds’. We discussed everything, from whether we wanted an older house, a newer house, how much we thought we could afford, how much we’d like to spend, what sort of mornings did we want? Did we want to be in the bustle of the city and close to shops or did we want quiet slow mornings where we could take life a little slower… the list goes on. Communication with each other will keep you sane for the following few months (or more, especially in our case!).
2. Choose The Right Location.
Have a drive around the locations you’re thinking of. We wanted half way between our jobs and somewhere that was very ‘country-esque’. We could never afford to live in the country, but we also don’t love the hustle of the city everyday, so for us we knew we wanted quiet, with good road and rail links into the city. We also checked the schools out as any potential future minions (I mean children, but let’s refer to them as minions for lols) would need a good school. We’re huge fans of good education; it’s the key to everything in life.
3. How much can I afford?
So they say that you should be looking at 4.5 times your gross salary. So if you’re taking in, say, 40,000 together, the general expectation would be that your loan (excluding your deposit) would be 4.5 times that. In this example it would be 180,000. Your deposit would then sit on top of that, so you could afford 190,000 if you have £10,000 saved. HOWEVER.
Banks don’t work on income alone. In fact, they hardly work on income anymore. Banks are interested in affordability. So, even if you do take in £40,000 together, and you would be expected to be offered £180,000, if you have a car on finance, anything else on finance or you spend BIG on anything in your life, you will see your considered income drop. The bank is concerned with what you have available, after all of your bills. Not what you bring in. They also work on your credit rating. It’s worth checking your credit rating ASAP. You can use noddle which is a free credit check service, but doesn’t update until a month or two later. Or you could use Equifax to get a quick and accurate credit rating score. If your credit score is lower than you expected, think about bills you may have missed or if you have financial associations with someone who isn’t the best at managing their money; it affects you.
4. Go online and get an agreement in principle.
This is quick and easy. Just pop onto any bank online that you would prefer, find their ‘apply for an agreement in principle’ option — fill in the information. They’ll give you a ballpoint figure, and that’s what you’ll need to work with. They will ask you how much deposit you have, and that indicates how much LTV they will give you. For example, if you pop in that you’re on £40,000 together, and plan to have a deposit of 10%, they’ll probably give you slightly more and you’ll be seen as a good investment.
5. Contact a Financial Advisor.
Once you’ve got your agreement in principle, you may want to get further information from a financial advisor. Mine was great — he advised me on my actual budget, taking into consideration the banks offer and what I could afford monthly. He then suggested a ballpoint figure, and I used that to locate houses for sale in the area we’d already chosen. I was referred to him by a friend and so I just gave him a call and asked him to come over to give me some free advice. It’s free first of all but they sometimes earn commission by referring you to a certain bank/lender.
6. Speak to the Estate Agents around the area you like and start viewing as many houses as possible within your budget
Although it’s vital to speak to estate agents and view plenty of houses, always obtain advice from a trustworthy source such as a family member or a friend. Estate agents will give you biased advice, even if they’re lovely, they are trying to make a sale and that’s just the way it is. Go online, search for homes within your budget, a few from the bottom of your budget and some from the top. What this will give you is a great idea of what you will get for your money. Different areas will obviously cost a lot different, so you may get an amazing big house for the same price as a terrace 1 bed in the city; this is why you need to know where you want to live, so you don’t waste time viewing homes that aren’t for you.
7. Don’t try and figure out everything straight away.
You want a house, so badly. You’ve saved your bottom off and you really want something to call your own. But honestly, it’ll be worth the wait in gold. Go and view houses, take notes, talk about it to friends and family, but don’t put your heart into it. Keep an open mind. Research. Talk to people who have already bought their homes, what was their experience? All these things will help you feel confident when talking to your financial advisor or the bank.
8. Put an offer in – but wait for the home report if you can.
My advice is to get a home report on the house. When you’ve had that report (you can pay for one from an individual company or wait until you’ve put an offer in and your mortgage company does one), you know how much the house is worth. Generally, the house sale price is increased by 5k, because they want to sell it for profit, but they don’t want to out-price people. Offer at least 5k under the asking price, but know your limits if negotiations start increasing your offer.
8. Your offer is accepted – paperwork time!
You need to apply for a mortgage. Our financial advisor did this bit, but I had researched so much that I knew exactly what he was going to do and had all the information ready.
You will need:
– 3 months bank statements
– 3 months pay slips
– Money for the house report.
– Proof of your savings for your deposit.
The house report will be the bank sending in a house inspector to check the building is worth the money you are applying to borrow. There are different levels of a home report – you can go for basic, advanced… I would advise making that decision based on the age of the house. If you’re going for a new build, I’d buy the most basic one. If you’re going for quite an old house, the chances are there’ll be a few issues with the building or walls. Doesn’t make it any less of a great buy, it just means it’s been around a bit longer, but I bet it’s got great character! New builds lack character, old house lack the perfect finish. I think it’s about what’s important to you, or what you can afford.
9. Pick a solicitor that’s working for you
Speak to friends and family about who they have used previously. Look online, who has good testimonials? Contact a few places, ask their rates. You want somebody who is going to do a good job, but who is going to listen to what you want. Although they deal with the legality of the situation, they will ask questions on your behalf. It’s vital you choose somebody you feel comfortable asking 100 thousands questions to, you’ve never done this before and it’s ok to ask!! I can give you the name of the solicitor I used if you live in South Wales.
10. Don’t let the mortgage offer get you too excited (crappy, right?)
You will be beyond excited. Beyond. The bank say yes, you have your savings and you absolutely want the house right now. Take a breather. The bank say yes, the money is sorted. However, this is a marathon not a sprint. Relax, plan accordingly & hope it takes 12 weeks, not 6 months! We had everything in place when we found the first home we wanted to buy, but unfortunately it all fell through. Keep focused, don’t put your heart into it until you get those keys.
There is ALOT of information I haven’t put down here so if you have questions on anything I haven’t expanded on — just leave a comment and i’ll reply to you ASAP.