So, you've decided that you want to buy a house, congratulations! Now what?
1. Figure Out a Budget
Whether you're buying a house alone, with a partner or with a fellow investor, you will need to figure out how much you can afford to spend. 2019 research shows that the average salary of a first-time buyer is 54,000... but this could also be the combined income of several parties You have to work out how much your combined steady income is- remember mortgages usually take around 25+ years to pay back, so you want to make sure that you can make the payments for at least 300 months in a row! Not only this, but your bank or mortgage provider will also want to make sure that you can pay up, so if you can't prove that you're consistently earning enough to make your payments, they won't approve you for the mortgage. This means bonuses and one-off payments don't count towards your salary. Your mortgage shouldn't be any more than the rent you're paying now. It should be significantly less. And you also need to take into consideration that you might need to renovate the home, and you're going to need to furnish it too! A good rule of thumb is the 36% rule; you shouldn't be spending more than 36% of your monthly income on debt like a mortgage, credit card interest and other loans like cars, student fees etc.
2. Location, Location, Location
Most people are going to want to be relatively close to work. It's essential that when you apply for a job, you consider housing as well... how much of your paycheck is going towards living and travelling? Either way, house prices vary dramatically worldwide, and even just in the UK alone. The average house price in London (zone 1-6) is £501,000, and that figure appears to be going up by at least 5% every year! Meanwhile, the average house price in Sheffield is only £167,378 You're going to want to sit down and figure out your priorities. Do you want to be close to work, or are you okay with travelling? If you're further away from work, will you spend more on travel than you would on a mortgage on a closer house? Do you need to be close to a school if you have or want kids relatively soon? How close do you want to be to your family? What does your city provide you with?
No matter who you buy with, you'll have to put down some deposit. Usually, they're about 10% of the home's value, but you can control and negotiate whether you want to pay more or less than that percentage. Ideally, you'd be paying as big a deposit as possible. It means you're borrowing less money from the bank, so your monthly instalments will be smaller, and you'll be paying less interest. The downside? You're going to be eating further into your savings- we never recommend putting your entire savings into a property as you need to ensure a safety net. If you've been saving for some time, make sure your money is in the correct account. Some accounts will offer you help when it comes to buying a property- a help-to-buy ISA not only has better interest but is also subsidized by the government. That's right. They'll chip in to ensure you can get the house you want (or at least a place).
When your offer is not accepted, make a counter-offer (hence why your initial offer shouldn't be the highest price you're willing to pay) and keep going until you reach an agreement.
Immediately after the offer is accepted, pay the holding deposit (1 or 2 weeks rent - it will be deducted from your full payment, so don't worry about it). This will lock in the property for you and prevent others from coming in with a higher offer.
Obtain references. The estate agent will guide you through their application process. Typically, all you need to do is submit your information, and they (or their referencing company) will handle everything else. You'll generally need to submit your information to the estate agent, and they will take everything else (or their referencing company). The agent will walk you through the application process.
After you have paid your agent's fees (not any if you go directly to the landlord), you must pay the balance owing, which is typical - 6 weeks rent as a security deposit, one month's rent in advance, and the balance of the amounts you owe. Then go ahead and pick up your keys. Before you move in, make sure all the things they claim are in the inventory and that everything is in the condition they say it is.
Suppose you report missing or damaged inventory initially. In that case, the damage will not be deducted from your deposit (keep all communication written, so you have evidence of this, and you will be able to prove this later). Remember that you can save money on rent by signing a more extended rental agreement (e.g. two years) and give yourself an advantage over any other tenants the landlord may consider.
In the offer process, mention that you are likely to stay long term to ensure you get the house/flat you want!
Be vigilant about moving out of focal regions to get a good deal on rental costs. Transport can be very costly - particularly assuming that you travel during a busy time so you could end up no good monetarily while living outside of focal zones in the city as the distinction you believe you're saving has been spent on transport, all things being equal.
There's no enchanted method for making house hunting tranquil. It's a gigantic second in your life and a choice you want to get right, which makes it distressing. However, by following these tips, you can ensure that you're allowing yourself the best opportunity to track down the right house without taking up a lot of your time or giving you excessive cerebral pains.
Information in this publication is provided for general information only, and it does not purport to include every aspect of the topics with which it deals. You should not take it as advice. Prior to taking, or refraining from taking, any action based on the content of this publication, you should seek professional or specialist advice. Kixy LTD or its affiliates are not rendering legal, tax or other advice through the content of this publication. A similar outcome is not guaranteed. The content in the publication does not represent, warrant or guarantee, either expressly or impliedly, that it is current, accurate, complete, or up-to-date.