Buying a property can be exciting as well as a challenge, especially when done for the first time. There might be some aspects which you don’t know, like hidden costs which could be daunting. We have put together a list of practical advice for the first-time buyers, to ensure your purchasing experience is as simple and stress-free as possible.
1. Loan approval in principle
Before you go house hunting make sure to have loan approval in principle from your lending institution.
Many Auctioneers will not entertain first time buyers unless they have approval in principle. This means getting a meeting organised with your prospective lending institutions well in advance of house hunting.
Most lending institutions will want to see that you have the capacity to and a history of saving, typically they look back over your accounts for a period of 6 to 12 months.
So get organised, start saving and try and avoid any erratic spending habits.
The cost of buying a house is not just the purchase price. In addition to the purchase price, there are various different outlays you will need to budget for, including;
- Engineer/Surveyor Fees: it is advisable to have a structural survey of the property and boundaries carried out at an early stage, in order to identify any potential issues with the property. Normally, the purchasers will organise and discharge this themselves but your Solicitor should be able to provide recommendations.
- Planning Search fees: your Solicitor will arrange for a planning search to be carried out against the property.
- Stamp Duty will be payable on closing @ 1% of the purchase price.
- Land Registry Fees will be payable on closing (based on the purchase price of the property and will vary in each case).
- Search fees on closing: on the day of closing, your Solicitor will search the various registers to ensure that no judgements have been registered against the Vendors or the property.
- Local Property Tax: The Vendor is required to pay this yearly in advance. Therefore, on closing date their Solicitor will forward an apportionment account whereby they will apportion (spilt) the cost of this with the Purchaser.
- Life Assurance: this will be a term of your mortgage. A lending institution will require you to keep adequate life assurance throughout the duration of your mortgage. In the event of your (or your partners death) the life assurance will kick in and clear the mortgage.
- House Insurance: again, this will be a term of your mortgage. A lending institution will require you to keep adequate house insurance to cover the rebuild cost of the property throughout the duration of your mortgage.
- Property Valuation: where you are getting a mortgage, the lending institution will require an up to date valuation (within 6 months of the loan drawdown date). They will have a panel of Auctioneers from which you can chose.
- Solicitors Professional Fee + VAT: Speak to your Solicitor, they are required to furnish you with a written estimate of the estimated cost of their fee. As a rule of thumb, the more work involved the higher the fee will be.
3. Final walkthrough
Before closing the purchase of a second hand property, arrange a viewing or “walk through” the property to ensure all items that are to be removed are and all items to remain are still in the property. If things are not “as agreed” then your Solicitor may choose to postpone closing the sale until matters are put right.
If you are buying a new property from a developer, once the house is ready for handover you or your Architect/Engineer should carry out a walk through and prepare a “first fix list” which you will give to the developer. Once the developer has completed/rectified all of the items on this list you will then prepare a “second fix list” and once all of these items have been taken care to your satisfaction then your Solicitor can proceed to close the sale
4. Ask Questions
Don’t be afraid to ask questions. This is your first time buying a house and therefore you are likely to have a lot of questions. You have never been through the process before and it is vital that you feel comfortable in asking any questions that you may have. Don’t be afraid to ask your Bank, Auctioneer, Engineer or Solicitor any question you may have.
Your Solicitor should act as the linchpin, pointing you in the right direction, explaining how the whole process will work and the timelines involved.