Having a shelter of one’s own is a dream for many, but the reality for a few. After all, buying a house is not as easy as buying a refrigerator or a washing machine.
Planning a home purchase is a lengthy affair, which is why you must have a detailed plan to make the complex art of home buying, simple.
As with anything, fulfilling your aspiration of owning a house can be easy if you know the right way to approach it.
Read this article, as we take you through the things you should consider to give shape to the best dream you have ever seen in life – having a shelter of your own.
Table of Contents
The Home Buying Process in the UK
The home buying process in the UK is a lot simpler than you can imagine. Let’s start with the basics and move our way to the top.
Find Out The Property
The basics you need to consider while buying a property are its price, location, and the increase in monthly liabilities post purchasing a house.
Soft search loans can be a nice way to get a rundown on the monthly liabilities. It can also simplify the task of property selection by giving you an estimate of your purchasing power.
Once you figure out the location and the budget, the next thing is to look for real estate agents and property websites which list properties that meet your criteria.
Before you zero in on a property, remember to go through the following steps:
- Visit the property in person
- Stay ready with a list of questions you need to ask the property owner/dealer
- If possible, take someone along with you, who understand the real estate industry
- Inspect the property like an expert, both inside and outside. On the inside, check the electric connections, plumbing, and the quality of interiors. On the outside, look for visible damps on the wall or loose building blocks.
- Establish rapport with the seller. This might help you to manage a discount.
2. Consider the Costs
Many home buyers factor in only two costs while purchasing a property. The first is the upfront charges, and the second is the mortgage costs. But, they often fail to consider the third cost – maintenance, or ongoing costs.
The upfront fees include the down payment, which can be as low as 5% of the loan amount and may go up to 40%. The upfront fees also include the valuation fees, surveyor’s fees, legal fees, electronic transfer fees, broker fees, removal costs, and stamp duty.
Stamp duty does not apply on properties below £500,000, till 31st March 2021.
Mortgage costs include loan EMIs and insurance. Your loan eligibility depends on multiple factors like monthly income, monthly liabilities, down payment, and credit score. Insurance costs apply to both the property and well as the buyer’s life.
The third, and one of the most important costs, is the ongoing costs. Ongoing costs include insurance premium, Council tax, maintenance costs, and charges for utilities like electricity, gas, and telephone, among other things.
3. Research the Area and Property Prices
Occasionally, a property owner may defy the property price range in the area and set a price, which is higher than the average property price. Barring few such properties, you will generally find properties that hover around the average property price.
In this age of the internet, finding out area-specific property prices is no more a difficult task. You may visit websites like Zoopla or Nethouseprices and get an estimate of the average property price in the area you have decided to move in. Alternatively, you may approach the local administrative authorities to get an elaborate idea about the locale.
Researching the property location and the area can help you identify places that are prone to landslides, floods, or crime, which may shoot up your insurance bills and maintenance costs. It may also help you to find whether the area has schools, colleges, and transport link to other parts of the UK.
Buying a property is a long-term bet. It’s always better to invest more time researching the property before purchasing it than to buy it first and regret later.
4. Check the Property Price Trends
You would often find the real estate industry behaving much like the stock market, where prices would randomly go up, only to come down again.
Property prices depend on multiple factors that do not have anything to do with real estate, per se. Consider the government suddenly wakes up and realises that an area requires better roads and more transport options. The properties in the vicinity would cheer up the fact and raise the prices, anticipating great demand.
Two months later, there is a flood that ravages the area which saw a surge in real estate prices, forcing the government to put the road construction project on the backburner. This would almost instantly prompt property prices to come down.
As with our lives, property prices are often unpredictable. It’s good to look at the previous and current property trends to know what drives the prices.
5. Choose the Right Mortgage Lender
Mortgage loan providers come in various shapes and sizes. While some would love to clearly lay down the terms before handing you over the money, others would seem sweet until you discover you owe a fortune for availing the loan.
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Generally, your loan eligibility and interest rates depend on factors like net income, gross monthly liabilities, type of the property, and the credit score. Lenders often offer special discounts if you are an existing customer and have a high credit score.
It’s prudent to research a little about the track record and business viability of your lender before trusting them. A lender with poor financial history can often offer you loans at a low down payment and cheap interest rates, only to make up for the money by increasing the charges later.
Once you successfully get through the above-mentioned, the only things that can keep you away from home are surveying, exchanging contracts, and moving in.
In surveying, you engage a professional building surveyor who evaluates the property and tells you whether the property is suitable to use.
After surveying gets over, you become officially ready to exchange contracts, where the seller will transfer the ownership of the property to you in exchange for money.
The last step that remains after everything is moving in to lead a new life at a new home you can consider your own.
Buying a home is easy. Getting the best interest rates is tough. Straighten up your credit profile to fulfil your dream without burning a hole in the pocket.