If you are keen to move from seasoned renter to first-time homeowner, you need to consider how you are going to make the transition successfully. It isn’t as simple as taking a foray to the estate agents and choosing a home. There are a whole host of other stakeholders that will be interested in your purchase, including your solicitor, your mortgage lender, and your family. Buying a house requires a lot of preparation. While renting can be fun and give you the freedom you crave, the chances are that there will come a time when you want to put down roots. You might not be moving jobs as regularly, and your kids might be settled at school. If you are keen to get your foot on the property ladder, take a look at these first-time buyer fundamentals that you cannot ignore.
When you buy your first home, it’s crucial that your financial ducks are all in a row. Think about how much money you can save for a deposit on a house. While one hundred percent mortgages were common five years ago, they are not recommended anymore. You need to ensure that you can build equity within your home, so it becomes a profitable asset. Negative equity, where you are paying back more loan than what your pad is worth, is too risky. Try and save a ten percent deposit. If the home you want to buy is £200,000, you need a £20,000 deposit, which will leave you with a £180,000 mortgage.
When considering how to get a mortgage, you need to present yourself as a responsible borrower. Consider how much you could feasibly borrow. Along with your partner, work towards a three times joint gross income amount. Then, apply within your means. A home loan lender will want to see proof that you will pay back the money. Don’t venture into your overdraft for at least three months before applying for a mortgage. Ensure that you save any big-ticket item purchases until after you have bought your first home. Make sure that your credit rating is top-notch and that you pay back any debts on time. With any luck, your home loan application will go through, and you will have the finances to fund your first home purchase.
If you aren’t sure where to buy, you need to go out scouting areas. You need to think about what you need as a family. You might be keen to find an area with good transport links, decent amenities, a low crime rate, and good schools. It’s all too easy to be seduced by the seemingly good deal that an estate agent presents to you in an up and coming area. The chances are that this up and coming area is a bit run down and has been for decades. Go for a well-established area instead as you will have a greater chance of making money on your asset.
Remember, your first home purchase probably won’t be your forever home, so consider this a head purchase rather than a heart purchase. Check out the property price history for the area you are looking to buy. If they have increased over the past five years, then the chances are looking positive for you to make some cash if you hold onto the property for a few years.
Outperform The Market
As a first time buyer, you need to view this home as a stepping stone to your dream humble abode. Think about how you can outperform the market. This is why you should always try to purchase the worst house on the best street. This gives you room to renovate and make alterations that will result in you outperforming the market. If you have the readies to fund a renovation, you can increase the square footage of the pad you buy. The easiest way to do this is to add an extension to create a large kitchen diner or to go up and create a master suite in the attic. By doing this, you will increase the value of your home.
Consider the exterior of your pad and bring it up to the standard of your neighbor. Consider painting the rendering, adding window boxes, replacing the driveway, and landscaping the garden. Doing this will increase the curb appeal of your home and help any potential buyers have a good impression as they enter your home.
This purchase will be your first step on the property ladder. House-hunting should be fun, and while it can be a little stressful, you should have a positive frame of mind as you hunt for homes. Don’t rush into your purchase and enjoy your house hunting journey.