SHOULD YOU BUY?
House prices are on the up again after several years of relative calm, loadng more pressure on to anyone trying to buy. Yet buyers need to pause and ask; what? when? and whether to buy.
Buyers should focus on whether buying is affordable and the right decision on the whole, rather than panic over house prices or develop the ‘must-own, must-own’ mentality.
FREE MORTGAGE DEPOSIT CALCULATOR
A mortgage is most people’s largest single outlay, and minor differences in how much you borrow can have a major effect.
A Mortgage Deposit Calculator asks questions to determine when you’ll have the dough for a decent deposit. Then see a Top Savings Accounts guide to maximise the interest.
As for deposit size, Government schemes such as Help to Buy have helped increase the range of mortgages for people with 5% to put down – but borrowers pay a premium at this level. Deals become more competitive at 10% or 15%, and for the really worthwhile rates you need 25%.
WORK OUT THE ACTUAL COST OF BUYING
It’s not as easy as get a mortgage, grab the keys and you’re in. Purchasing a house’s almost guaranteed to cost more than you expect. Here’s what to factor in.
Mortgage arrangement fee.
You should expect to pay your lender an arrangement fee. They vary but £1,000 is around average. In some cases this is non-refundable, even if the purchase falls through.
This is the fee lenders charge for a valuation to check the property exists and that it also offers sufficient security for the loan. The cost differs due to lender and purchase price, but ideally budget for £300.
Many lenders will contribute to legal fees, although in that case you would have to use a solicitor with their approval. If you pay for your own conveyancing, you should expect about £500-£800, depending on purchase price.
Buy a property for more than £125,000 and you’re likely to have to pay a percentage of its price to the taxman. The simple way to find out how much is to use a Stamp Duty Calculator.
These are yet another costly aspect to any purchase, with the average survey costing £400 to £700. Many people pay for surveys on purchases that fall through, so budget for 2 or 3
Unless you can pile your valuables into the back of a car, take into consideration a removal van. These start at £100 for small local moves, but can easily run to £1,000 for shifting a your belongings long distances.
From flaky paintwork to leaky sinks, put aside some cash for unexpected property maintenance. As MoneySaver Delphinum says: “If it’s an old house, expect Frank Spencer to have done every piece of DIY work. Expect to undo everything and do 10 other things you didn’t expect to do before you start a job.”
Furniture and extras.
Currently renting a furnished place? keep in mind that you’ll need to buy everything from beds and sofas to lawnmowers and carpets. The list is endless.
DON’T JUST TAKE THE MAXIMUM THEY’LL LEND YOU
Find out how much you can lend before you start hunting. But don’t just trust what lenders say you can afford to borrow. After all, struggle to repay and some may happily give you credit cards to make up the shortfall.
Only look at properties within your budget and avoid those even a little over. If not, you’ll either break your resolve or be disappointed.
FREE HOUSE SALE PRICE TOOLS
The web’s become a goldmine of information to investigate any property. Once only the preserve of agents and brokers, now done right, you can get price information free.
To help answer the question “72 Lois Lane went for £210,000, but was it a neglected bedsit or a plush 3-bed with kitchen island and walnut floors?”, home search site Rightmove matches up sold prices with detailed old property ads, including pictures, prices, descriptions and floor plans.
For 30+ tools to review a home, including sites to assess crime or flood risks, see the Free House Price Valuations guide.
TYPICAL TIMELINE FOR ENGLAND AND WALES
Find a property:
look around the area, search through estate agents and check websites.
Put in an offer:
Tell the seller what you wish to pay and any conditions.
Offer to exchange: 2 to 6 weeks
Next get a survey to check the property’s condition. Your solicitor will look for any legal issues
You pay your deposit and can’t back out without major cost.
Exchange to sale: instantly to 4 weeks
You exchange the rest of the cash for the keys and deeds. The property’s then legally yours.
BOOST YOUR CREDIT SCORE
Have you been rejected? Do not apply for mortgages unless you’ve checked your credit files held at Experian, Equifax and CallCredit are error-free.
Tiny mistakes can cause rejection. For example, active accounts registered to old/wrong addresses can effect it badly, so whip through your credit files and ensure any active account is registered at the right address.
It’s possible to check your files for free via an online loophole. For details and how to correct any errors, see the Credit Rating guide. And for a basic list of things to look out for before applying, see Boost Mortgage Chances.
ARRANGE A MORTGAGE IN PRINCIPLE
Few lenders offer actual mortgages if you have no property in place – they offer a ‘mortgage in principle’ (MIP). This provisionally lets you know how much you can borrow, subject to finding a suitable property in a specific time.
Evidence of your deposit and MIP can give you a huge advantage when putting in an offer. It could mean a credit check, although one mark on your file isn’t too big a deal (see the Credit Ratingguide). It’s best to be in contact with a decent mortgage broker who’ll often be able to help give an idea of what you can borrow.
Although keep in mind MIPs give absolutely no guarantees – they are subject to valuation. Mortgage rates shift daily, so always have a look see whether a better deal’s become available.
FREE PRINTED MSE MORTGAGE GUIDES
Re-mortgaging is the single largest Money Saving activity possible: the financial equivalent of liposuction. For every 1% in interest you cut on a £100,000 outstanding mortgage, you save £80 a month.
CHECK OUT THE NEIGHBOURHOOD
No matter how plush the pad, Money Savers are unanimous that location counts. You can’t move a house to another area, but you can do it up.
So check the neighbourhood out on foot, hunting for clues. Visit the parks and pubs at different times of day. Are cars clean and well-maintained? Do you like the local shops? Are walls covered with graffiti?
Get the lowdown from locals and ask a local Policeman/woman or Neighbourhood Watch co-ordinator. If you’re a total newcomer, stay in a local B&B to get a real feel for the area.
Police crime-mapping websites show local hotspots and break down recorded crimes such as burglary and anti-social behaviour. Elsewhere, there’s free information on school league tables and even noise level checks. See Free House Price Valuations for a full list.
USE THE RIGHT PROPERTY FINDERS
We’re no longer in an age where peering into estate agents’ windows was the only way to see how much folks were looking to sell a house for.
There’s a surplus of property search sites out there. Remember asking prices are often wildly confident, showing what the seller would like for the property, not what they’ll get.
Some homes are sold before they even appear on the sites, so get friendly with a local estate agents to hear as soon as a place finds its way on the market.
Probably the biggest of home search websites, Rightmove, is the best place to compare homes on the market. As well as boasting an outstanding amount of properties up for grabs, it plots listings on a Google map for ease.
Zoopla also lets you match up sold prices with old property advertisements, including pictures, asking prices, descriptions and floor plans. Go to Zoopla’s sold prices section, search for an area and click on a property for historic listings.
Money Savers are also fans of Home.co.uk. The site can be gawky, but includes tonnes of data alongside listings, including how the asking price compares with others in the town and postcode for reference.
SQUEEZE THEM FOR INFORMATION
Before putting in an offer, pose as many questions as possible – and get important answers in writing. Nothing is too silly. Even if they don’t tell the truth, you may notice them squirming when you broach certain subjects.
Here are our top 20 questions to ask:
How many viewings has it had?
How many offers has it had?
How long has it been on the market?
Can I see electrical and gas installation checks/reports?
How long is the lease (if it has one)?
Have there been any neighbour disputes?
Why are the vendors moving and are they sure they want to sell now?
What renovations have been done?
How old is the boiler and when was it last inspected?
When was it last rewired?
Where are the vendors moving to – is there a chain?
If a flat, how much are service charges and ground rent? (Read more on charges.)
Who lives upstairs/downstairs/next door?
How long has the seller lived there?
What’s included in the sale? White goods? Curtains? Wood burner?
Are there any parking issues?
If there’s a real fire, is it safe to use?
Have there been any subsidence problems?
What’s the council tax band? (Also check this yourself.)
Has anyone ever been murdered here? (Google the address too.)
TAKE PICTURES WHEN VIEWING
Take photos on your mobile, as they’ll be a useful reference point when all the homes blur into one.
Do check with the estate agent first of course, but don’t be too shy.
As one house-seller on the forum, George, says:
“If I thought letting a potential buyer take some pics might clinch the sale, I’d have special lighting set up by the BBC.”
VIEW AT DIFFERENT TIMES OF DAY
You should ideally view the place three times at different times of the day to get an idea of what the flat and neighbourhood are like.
Daylight makes spotting flaws easier, but the intolerable music which will make your life hell may not begin until the neighbours get back from work.
Money Saver InTheRed2009 wishes they’d known this advice:
I viewed my flat just once before buying, and within an hour of actually moving in the music started thumping through from upstairs. This is still an ongoing problem. I viewed just once, during the day, and it was quiet, so assumed there was no problem.
GET ALERTS ON FAVOURITE STREETS
If you want something in a specific area or street, set an alert on Rightmove and it will email each time a vendor lists a property. Simply type a postcode or area and click ‘save search’.
USE OUR CHECKLIST TO SPOT DEAL BREAKERS
Don’t waste money on a survey only to discover obvious problems. For second or third viewings, take an expert or realistic mate to give their honest opinion of the property and price.
Small issues such as a broken kitchen drawer needn’t be a deal-breaker. But make a list, so you can ask the seller to fix before you get the keys.
scour the joint for wet spots, mould, peeling wallpaper and condensation on windows. Check inside cupboards too. Use your nose – does it smell odd?
Look up at ceilings.
Check for cracks, stains, drips and problem leaks.
Open doors and windows.
Also shut every door behind you as you’re being shown around to make sure they all work. Open cupboards and drawers with a smile and say: “I do hope you don’t mind.” Remember, you’re giving them £100,000s.
Turn lights on and off, especially those with older switches. Fire up the cooker. Also check the age of the wiring, as updating electrics can cost a lot.
Count power points.
Make a floorplan and mark out power point locations in each room, testing sockets too.
Inspect the plumbing.
Flush toilets and turn taps on. Check cupboards underneath sinks are dry. Check water pressure and that it gets hot. If you’re feeling brave; go outside, lift the drain covers, then get someone to flush the loo and check the drain’s flow.
Feel the heat. Ask the seller to switch on the boiler and turn on the central heating. Check the radiators for leaks and rust, and make sure they all get hot consistently across the surface.
Locks are key.
Ensure door locks are up to insurance standards. Most policies insist that front and back doors be fitted with a five lever mortice deadlock. Check windows for locks and the front door for break-in signs.
Watch out for woodchip.
Buying somewhere with woodchip or other textured wallpaper slapped all over it usually means excavating through layers of paper. And probably pulling half the plaster off.
Lift mats and rugs.
Check for stains and other undesirables lurking underneath.
Turn on your phone.
Check for a signal to confirm the area and your service provider get along
Audit the attic.
Inspecting the loft in daylight is a great way to gauge the state of the property’s woodwork. Check timbers for rot, as well as cracks or holes.
Observe outside walls.
Look out for wall cracks, mould and rotten woodwork.
Hit the roof.
Take binoculars and check for missing/slipped tiles. Eye up the gutters and woodwork for potential problems. If need be; go on a rainy day, to see if the gutters leak.
Avoid kitchen nightmares.
In the kitchen, imagine preparing a dinner. Is there enough room?
Take a compass.
Check if estate agents’ promises of “a sunny south facing garden” are true.
Pry next door.
If buying a flat or terrace, alarm bells should ring if neighbours’ properties are rundown. Their problems can quickly become your problems.
Vet the seller.
If they strike you as unreliable, think twice. A property’s not good value if the vendor doesn’t want to sell it. You could waste thousands in fees.
KNOCKING ON NEIGHBOURS DOORS
Neighbours may offer tip-offs on the area or home, but it’s also a chance for you to get the measure of the people also.
Check how well maintained their home is – look for junk abandoned at the front and gardens engulfed by weeds.
Also chat to neighbours nearby, but not next to, the property. They’ll be honest about what the area is like and are less likely to be either pally with the sellers or anxious to get rid of them.
TOOLS TO FIND HOMES WHERE SELLERS DROP PRICES
Secret web weapons let you track when sellers put particular properties on the market, plus when and how much they cut asking prices.
One Money Saver describes Property-Bee as “probably the most fun you’ll have online”. A free add-on for web browser Firefox, it show sellers on Rightmove who’ve altered listings. This includes price cuts, so you can see whether lack of interest means they might be willing to accept less.
Also try Propertysnake, which lists homes that have recently dropped asking prices and by how much. Type in a postcode to see who’s having trouble selling their house and what percentage they’ve trimmed the price by. For more free tools, see the Free House Price Valuations guide.
CONSIDER RESALE POTENTIAL
If you don’t want to live in the property until you die, consider ease of resale.
This may be your dream home, so you can live with walking through the kitchen to get to the bathroom. But will others?
If it’s been sitting on the market for a while, think over the possibilities and why it hasn’t shifted. Are people put off by the street, a takeaway shop below, lack of parking or a tiny garden?
STAMP DUTY CALCULATOR – WHAT WILL YOU HAVE TO PAY?
Buy a home and you’re likely to owe stamp duty. It’s one of the biggest lump-sum taxes.
The easy way to find out how much, is to use our Stamp Duty Calculator. Remember you only pay stamp duty on the property itself, not the fixtures and fittings, provided the amount you pay for them is a reasonable market value. This is especially handy if you’re a touch over a stamp duty level, for example, £252,000.
Stamp duty – the UK’s most ridiculous tax
It’s not that there’s a tax on property that’s still, but how it works. With other taxes, you only pay higher rates on amounts above a threshold. Here, you pay it on the whole amount.
So buy a property for £250,000 and you pay 1% (£2,500). But buy one for £250,001, and you’ll pay 3% on the WHOLE amount (£7,500).