Buying your first home is more than likely one of the most exciting and stressful things you will have done to date. It may also be the first time many people will have used a solicitor.
With the average age of a first time buyer in the UK now being 30, there are a lot of things to consider when buying a home. Location, amenities, commuting time as well as all of the additional costs associated with running a home.
We take a look at what all first time buyers should know.
Stamp Duty Land Tax is a tax payable on your home after the first £125,000. This isn’t applicable to first time buyers in England or first time buyers in Wales unless the value of the property is over £180,000.
It is a good idea to find out the council tax band of the property you are interested in when you are viewing it. As the price of each band can change considerably and it is one of the major bills you will need to consider.
If you are buying a home on your own, you can get a 25% reduction in the amount of council tax you pay.
You are also able to check how much council tax you would need to pay on a property by searching the properties postcode here.
Help to Buy
There is a government initiative set up in 2013 to help first time buyers save the deposit for their first home. For every £200 you save in the Help to Buy ISA the government will top that up by 25% (£50).
The minimum bonus amount is £400, so you have to have saved £1600 before you are eligible for the bonus.
This is capped when you reach a total of £12,000 (£3,000 from the government). You are able to deposit a lump sum of up to £1200 into the account when opening, and up to £200 after that from the next month.
However, this sum is only applicable to the mortgage deposit, and not the deposit for the property. Your solicitor will need the details of the ISA to claim the bonus and they will charge a fee for doing so.
Estate Agents fees are something you only need to pay if you’re selling a property, not buying.
Estate agents are there to chase the buyer. They will email you lots. Be nice to them and keep in touch. They should also be able to tell you where the seller is up to and what the chain situation is.
There are two different types of surveys that you can carry out on a property, structural and a valuation survey.
The valuation is done by the mortgage provider and some mortgage providers may do this for free. It provides basic information and cannot be used instead of a structural survey as it’s only purpose is to confirm the house is worth the amount you are paying for it.
You do not have to instruct anyone for this as your mortgage provider will likely have their own firm they will use. They will either complete their survey electronically or will visit the house, so you need to provide your estate agents with these details.
The survey should take less than a week. Once completed your mortgage provider will tell you if there are any issues with their agreement to lend following the survey. If anything crops up in the survey, you may have to commit to certain renovations or you may have to find a different mortgage provider.
Structural/building surveys have to be done by a survey company with the relevant qualifications and you, the buyer, will need to instruct a relevant firm.
It is best to do this after a valuation survey has come back from the Mortgage provider as if any problems arise on that survey, you don’t want to pay for a structural survey on a house you may not be able to buy.
Costs for structural surveys vary, but there are websites which will give you quotes and suggest local firms.
Building surveys aren’t always needed, if the property is a new build, but it is worth having as it will inform you of any potential problems in your future home.
Structural surveys have to be paid for upfront and can cost £500+ so it is important to factor this cost in. Anyone completing a structural survey will need access to the house you are buying so you need to provide the estate agents details to arrange this. Engineers can be booked up well in advance so it may take a few weeks to get your report back.
So it is best to get multiple quotes and ask for an estimate of when the firm could complete the report at the earliest and pick the fastest and most cost effective.
This is where you put an offer in on a house and another potential buyer intentionally puts in a higher offer. E.g you offer £5k below the asking price and are told this offer is accepted and another buyer asks if there have been any offers, they are then told there has been by the estate agent or the seller and still provides an offer either at the asking price or over it. The seller then accepts this one and turns yours down.
A way to combat this to ask that while your offer is being considered the property is taken off the market and any future viewings are cancelled.
Some estate agents will allow this, whilst others won’t. So it is worth asking.
Interest Rates and Inflation
Interest rates and inflation can change over time and can have a massive effect on your monthly mortgage repayments. So it is very important to understand how these can affect you.
Different types of Mortgages
- Fixed rate
You can apply for a 2 year fixed and 5 year fixed rate mortgage. The amount you pay depends on mortgage length and how much deposit you pay. There is also a fee for fixing your mortgage. However, as discussed in the section above, it does protect you from rising inflation and interest rates for a period of time.
There are several different types of variable mortgages. It means that your monthly payments can fluctuate depending on the interest rate, so if there is a low interest rate, it benefits you. But if they start to rise quite quickly, this can increase your monthly mortgage repayments.
The below fees are also all things to consider before buying a property:
- product fees
- admin fees
- completion fees
- booking fees
- variable valuation fees
- local authority service
- solicitors’ fees
- home insurance
- moving costs
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