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Taking your first step on the property ladder is exciting – but it can be daunting, too.
You’ve saved up the cash for your deposit, you’ve started the search for your dream home, but have you really done all your sums? Have you taken into account the hidden costs that can mount up when you buy your first house?
Adrian Flux Insurance Services has compiled a list of five essential checkpoints to ensure you end up living the dream and not getting trapped in a financial nightmare – from checking you can afford to live in the house you want to buy to finding the right home insurance, not stinting on a survey to finding a lawyer.
1) Cost of living: You might be able to stretch your finances to the limit and buy the house of your dreams, but can you actually afford to live there? Make sure you do your homework before you put in an offer: find out exactly what you’re buying – does the price include the garage, or will you need to rent one? Are fixtures and fittings included? Ask about cavity wall insulation and if you can see the Energy Performance Certificate. And if you’re considering altering your new home with a loft conversion or extension, find out whether it’s a listed building or in a conservation area which could restrict any future building work you have planned.
2) Mortgage: You’re unlikely to take out a bigger loan in your life, so make sure you get your mortgage right. Go to a broker registered by the Financial Conduct Authority, check who is paying their fee or go straight to the lender (a building society, bank or specialist mortgage company). The rule of thumb is that you can borrow up to four times your salary, although new rules have made lenders focus more on affordability – checking you can afford to pay your loan now and if interest rates rise – than strict multiples. Get a range of quotes, shop around and make sure you understand what you’re signing up to. Remember that there’s a difference between mortgage information and mortgage advice – advice involves an expert adviser spending time with you to ensure you find the right mortgage while mortgage information leaves the ball in your court.
3) Survey: With such a large purchase, you need to make sure that you’re getting exactly what you’re paying for, so it’s essential that you instruct a survey, even if you’re buying a brand new house. Surveys may seem expensive, but they could actually save you money if they pick up problems which could help you negotiate a lower selling price. Do not confuse a mortgage valuation with a survey.
4) Insurance: The latest research shows that around a fifth of homeowners are completely uninsured. You’ll need buildings insurance for your mortgage before you move in and content insurance as soon as you take possession of the keys. Make sure you think carefully about the value of your belongings before you give your broker a figure – you don’t want to be out of pocket if there is an emergency. Additionally, be sure to mention any items of high value and check if your policy includes accidental damage as standard. Make a detailed inventory of your belongings and keep it somewhere safe – ideally have two copies and keep one off the premises. Adrian Flux Insurance Services has a team of experts who can offer you a bespoke insurance policy to suit your property and your wallet.
5) Legal services: A good solicitor can save you thousands of pounds, even if it feels as if legal services are an expense you could do without. As a first-time buyer, you’ve got lots on your side: you’ve got no onward or backward chain, and you’re ready to move quickly, both of which can help you negotiate a better price. Ask friends and family to recommend a solicitor they know and trust. Your solicitor will deal with conveyancing, including drafting contracts, obtaining searches into matters that could affect the property, will look into issues such as rights of way, party walls or boundaries and will help you move towards completion.