Whether you’re looking to buy you’re first home, you’re moving home or you’re looking to pick up a buy to let property, there are important do’s and do not’s to consider along the journey. In this week’s blog, we’ve put together three major house buying mistakes to help prevent you coming unstuck as you navigate the process.
So, let’s dive straight into it!
- Not knowing what you can afford
The property value you can afford is a simple sum of the deposit you have available and the maximum mortgage open to you. Buyers typically have a good grasp of what deposit they have available and what they’d be willing to put into a purchase. However, the mortgage affordability isn’t so simple. Residential mortgage affordability is a sum based on your income and expenditure. It varies massively from lender to lender and depends on the percentage deposit you’re intending to commit. Buy to let mortgage affordability is largely determined by the anticipated rental income of the property. Getting an offer accepted on a property and then finding out you can’t afford to proceed is a nightmare scenario. A quick conversation with a qualified mortgage broker will help you understand your mortgage affordability and therefore help you understand your maximum budget when house hunting.
- Going for the cheapest solicitors
Solicitors/conveyancers are an essential part of a property purchase. They are responsible for the legal element of the transaction and they ensure everything goes through on completion day. Solicitors are instructed to act on your behalf to complete the necessary due diligence. Whereas mortgage brokers are paid by the lenders, solicitors are paid for by you as the buyer. Cheap doesn’t necessarily mean bad and expensive doesn’t guarantee good! It’s important to do your own research, read reviews and ask people for recommendations. A poor solicitor who doesn’t communicate can slow down the whole chain and cause frustration for all parties involved. It is not uncommon for sellers to pull out if the process has been dragged on for longer than is reasonable.
- Focussing on the lowest interest rate
We’ve mentioned this one many times before and we’ll continue to do so, we’re sure! The lowest interest rate doesn’t always mean the cheapest mortgage. Mortgages are set up with various fees and cashback options attached to them. The cheapest mortgage is determined by the “true cost” to you over the initial product term, eg: the 5-year fixed period. The interest rate forms a major part of this, but it is not the be all and end all. Typically, lower interest rates will have higher associated fees and higher interest rates will have lower associated fees. The size of your mortgage will determine which product is cheapest for you to go with. The low rates you see advertised are often only suitable for those with very large mortgages and a large proportion of equity in their property.
While the above list is by no means exhaustive, avoiding getting caught out by any of the house buying mistakes above should help make the process as seamless and stress free as possible. Buying a property will never be entirely stress free – it’s a big financial investment. However, getting the right advice from the right people will set you on the right path. For more information on the house buying process or any other mortgage or life insurance queries, we’re here to help with free, professional advice.