Buying a new home is an exciting time, but it can also be a little intimidating if you don’t have the right knowledge and support to help you through the process. When you’re navigating the home-buying process for the first time, there are bound to be some obstacles to overcome. But many of the most common first-time buyer mistakes can be avoided if you are aware of them. Here are four major pitfalls and how to evade them.
AVOID MORTGAGE REJECTION
A common mistake is applying for a mortgage without first checking your credit report. This could lead to your application being rejected for issues that are easy to fix. You can obtain your credit report from a service such as Experian or Equifax. If there are incorrect items on your credit report, you can ask for them to be removed. If there are items that are correct, but not representative of your current financial situation (for example, an unpaid bill during a previous period of unemployment), you can also ask to add a notice of correction. You are permitted to submit a short explanation of up to 200 words.
AVOID GOING OVER BUDGET
Often, first-time buyers have saved enough for their deposit, but haven’t considered all the extra costs which put a strain on their budget.
These can include:
• Stamp Duty Land Tax (SDLT), if you’re buying a property worth more than £300,000 in England or Northern Ireland
• If you’re buying a property in Scotland, you will pay Land and Buildings Transaction Tax (LBTT) and in Wales Land Transaction Tax (LTT) instead of Stamp Duty
• Mortgage arrangement fees, which can run into thousands of pounds
• Solicitor or conveyancing fees, to pay to manage the transaction for you
• Insurance, including buildings insurance (which is essential to secure a mortgage) and other types of insurance to ensure you don’t lose your home if your financial situation changes
These extra costs could potentially add up to around £15,000, so you might need to save up a little longer before you’re ready to buy.
AVOID COSTLY PROPERTY PROBLEMS
As a first-time buyer, you might not be aware of all the things that can go wrong with a home, and they’re not always visible.
• An old boiler may need to be replaced soon after you buy the property, costing thousands
• Poor insulation in the roof and walls can add to your energy bills in winter
• Missing roof tiles can lead to leaks and potentially expensive water damage
It can help to take someone with more experience along to viewings, but they might also easily miss some issues. A professional survey, though it will cost several hundred pounds to arrange, will identify any potential issues and could save you a lot of money over the long term.
AVOID GOING THROUGH IT ALONE
Many first-time buyers try to manage the whole process themselves, even though expert advice is easily available. Obtaining expert financial advice can help you to understand how much you can realistically afford to borrow and repay, so you don’t overstretch yourself. A professional mortgage broker can help you create a plan to save a bigger deposit, or a budget so that you can afford all of your monthly mortgage repayments while continuing to save for the future. They will help you find an appropriate mortgage deal to minimise your monthly repayments and can give you access to a wider range of products than if you were to research the market yourself and look at a lender’s offerings. It’s also likely they will be connected to a professional network within the sector, and they may even be able to offer products that aren’t available to the general public. You will also be guided through the process of applying for a mortgage to avoid time-wasting rejections, get help with paperwork and you won’t have to handle the application. In many cases, first-time buyers will easily recoup the cost of this expert mortgage advice in the savings it brings them.