16 April 2014

Posted by Discount Insurance on Wednesday, April 16, 2014
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Here are 10 things to consider before you rush to buy your first property:

With headlines proclaiming double-digit rises in house prices and predicting more to come, and estate agents ramping up interest with open days and sealed bids, it is little wonder some would-be buyers are panicking.


Before you buy, it’s vital to work out how long you plan on living in the property. There’s no point in buying a studio if in a couple of years you might want to start a family.

Similarly, if your job or financial circumstances are in anyway unstable, is it a good time to tie yourself to a location and the monthly commitment of a mortgage?

If you buy the wrong place now not only could you quickly encounter the expense of moving again, if property prices fall you might find yourself forced to sell at a loss.

What happens if interest rates rise?

As of 2014, interest rates have been sat at a historic low for six years, but the general consensus is that they will rise again in spring 2015. As of mid-April, lenders will be stress testing mortgage applicants to check if they would still be able to afford their mortgage repayments if rates went up, but you too should consider the impact of a bigger monthly outlay.

If rates go up, will repaying your mortgage mean you can’t afford any of the other things you like to do?

Your money

It is vital to first assess the long-term impact of the sacrifices you will have to make. Are you ready for the commitment of a large mortgage? What if house prices fall and you end up in negative equity? You will be stuck there, unable to sell? Will you regret your decision to buy in those circumstances?

Hassle of home-ownership

Owning your home might seem like a dream come true, but if the boiler breaks down, the roof starts leaking or your new neighbour’s party every night till 3am, you may not find it so desirable.

As well as the inevitable repair bills, there’s the fact it is not as easy to move if you decide you are not happy here.

Would a long-term tenancy make you feel as secure?

Renting for the long term tends to be viewed as much more attractive elsewhere in Europe, where tenants have greater rights. But it’s a mistake to assume that in the UK you cannot rent if all you want is security of tenure and a home that you can make your own.

“There are thousands of landlords out there who are interested in the security and stability of a long-term tenancy, and if you find one, you can often agree that you can decorate the property and make it feel like your home,” says Glenn Nickols from online tenant forum The Tenant’s Voice.

It may even be possible to negotiate a cheaper rent if you are happy to rent the property long-term.

Widening your search area

House prices in London are rising up to three times faster than house prices in northern regions of the UK, according to Nationwide. Could you include cheaper parts of the UK in your search?

Even if you have to work in London, it’s worth considering whether you could afford to buy your dream home elsewhere and rent weekday lodgings near your office.

Some Monday to Friday room rentals in Central London (zone 1) start at just £400 a month and you can keep long-distance commuting costs low if you book train tickets in advance.

Cutting out the middlemen

Try finding properties in your desired area that are not on the market yet.

For example, look at properties that are being offered to let and consider making an offer.

You could also put a notice in local shop windows, papers and online forums as well as on social media. Search on Twitter for your desired area and ask locals to retweets a message stating what you are looking to buy.

What is happening to prices in your chosen neighbourhood?

“Research is key to keeping calm when entering the house-hunting process,” says Nick Mead from The Buying Solution.

Once you’ve figured out where you are interest in, set up email alerts on Zoopla and Rightmove, and create a spread sheet that tracks how quickly these proprieties are selling and the price they are achieving relative to the asking price.

Why are some properties and roads less popular than others and are you willing to compromise when others aren’t?

Is your mortgage lined up?

“To get ahead of the pack in a booming marketing, you need to have your mortgage in place, advises Nicholas Ayre, MD of home-buying agency Home Fusion.

That way if you want to make an offer, you can demonstrate that you can move quickly and are a serious buyer.

Typically, a mortgage agreement in principle lasts for six months and isn’t specific to any particular property. However, don’t panic and assume you have to stick with this deal if your bid is accepted.

Whether you are buying your first property, moving up on the property ladder or thinking of re-mortgaging, it's important that you use the right mortgage for your circumstances. Visit: www.discountinsurance.co.uk/mortgages for advice with no obligation!

Estate agents

“We are increasingly seeing estate agents using open houses as a tool to try and achieve the highest possible prices for their clients,” says Caspar Harvard Walls from buying agency Black Brick. “The advertised price for the property is often artificially low to encourage as many buyers to view as possible, thereby creating a sense of high demand and multiple bids above the guide price.”

Some estate agents have even started charging buyers who make successful sealed bids for a “finder’s fee”, usually 2-2.5% of the cost of the property.

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