The common mistakes made by first-time buyers (and how to avoid them)

In this month's edition, we're looking at the common mistakes first-time buyers can make when purchasing their first home, and what you can do to avoid them. 

Alongside our local events listings, there's also news on increasing numbers of landlords returning to the market, one in six parents are reported to have remortgaged their home to aid their children's property journey and finally, if you're looking to secure the best deal on your mortgage, why not read our tips?

The common mistakes made by first-time buyers (and how to avoid them)

 

There’s no denying that purchasing your first property can be an incredibly exciting process. Everything from your first viewing to deciding which bread bin goes best with your new kitchen can feel like a thrill, but that doesn’t mean that there aren’t a multitude of things to avoid as you look to buy your first home.

But don’t fret! We’ve outlined the most common mistakes that first-time buyers when looking for the property of their dreams, and what your best practise should be instead.

Seal an agreement in principle
First thing’s first; get an agreement in principle from your lender in place first. The importance behind getting this step resolved is that it will give you an idea of how much your mortgage provider will allow you to borrow, and given that they’re often valid for 30-to-90 days, you should have the best part of three months to search for the right home before you need to get the agreement re-evaluated.

The benefit of getting what’s also known as a mortgage promise in place is simple; should you find a home you love and need to act fast, there’s no guarantee that you can find a loan big enough for you to buy it. With that in mind, figuring out the amount of money that you have at your disposal is vital.

Check your credit score
Another simple thing, but one that is also frequently missed. Checking your credit score prior to applying for a mortgage can save you a large potential headache; if you have a poor credit score then you run the risk of your mortgage application being rejected, which will cause further damage to your score. An early check of your score prior to applying for a mortgage can allow you to correct errors and get your credit rating in a healthier place.

Do your sums!
The process of buying a home is about much more than the price of a property; you have to factor in valuations, house survey costs, legal fees and conveyancing. These financial hits can seem unreasonable, but again, they’re vital to making sure that the property you’re buying is in good condition. With that in mind, make sure that you have enough money for these vital parts of the purchasing process, too.

What’s going on locally?
We all have certain criteria for the area that we’ll be moving into when it comes to choosing a home. Are there good schools nearby? What about shops or park space? Are the transport links sufficient for your work or other needs?

Research the local area; find out if this place will meet your needs and provide what you require in order to enjoy your life. If you’re able, spend a bit of time walking around and getting a feel for the place. Moving home can be an emotionally overwhelming process, so the more you know about your new area, the more settled you’ll feel once you move in.

Ask questions and don’t be afraid to get advice
It’s important to know what you want out of a home prior to conducting viewings, and it certainly does not hurt to have an idea of what questions you’d like to ask before you start visiting properties. Ask the sellers why they’re thinking of leaving, for example, or how long they’ve lived at the property, whilst testing out things like taps, windows and lights.

Beyond that, seek professional advice from an impartial mortgage broker. This is key, as a broker can assist you with setting up a financial plan, help you to find a good deal on a mortgage and get the ball really rolling on the buying process.

Landlords are making their return to the market

 

Three years on from the Government passing buy-to-let tax and legislative changes, which resulted in a 3% surcharge on Stamp Duty on the purchase of additional homes also encompassing buy-to-let properties, it appears that landlords are now returning to the market.

Statistics from an independent estate agent have indicated that there has been an almost 8% increase in the number of landlords registering to buy over the last month, showing that the feeling in the market is overwhelmingly positive. With investors both national and international still wholeheartedly positive about the state of the market in the United Kingdom, according to SevenCapital’s Brexit survey, lettings would appear to be a strong bet once more.

Demand for city centre properties is now at an all-time high; in Birmingham, for example, between 2011 and 2016 around 8,000 homes were completed, whereas demand was closer to 20,000 showing the extent of overdemand and undersupply. This provides a stellar opportunity for landlords looking to invest in a city-centre location in order to reap the highest possible rental yields.

Rental yields by room, an increasingly popular option for landlords, are showing extremely positive values year-on-year; with the country as a whole reporting an average rise of 11%, according to the rental index from Ideal Flatmate.

With the recent spotlight on the rental market from the Government, renters and potential renters will be feeling buoyant in terms of their rights and responsibilities which should embolden them to rent a property, whereas previously they may have been more hesitant to take the step. This newfound confidence amongst renters should provide further comfort to landlords, knowing that there is a strong contingent of potential renters ready to move into their property.

Bird's Nest Billy @ The Old Town Hall, Hemel Hemsptead

Billy is a little boy with a big brother called Bo. They both have big hair. Bird’s nest hair!

Click here to read Bird's Nest Billy @ The Old Town Hall, Hemel Hemsptead.

Book Festival @ Berkhamstead Town Hall

Panels, Q&A sessions, book signings, fun interactive workshops, children's story writing competition and antiquarian book stall.

Click here to read Book Festival @ Berkhamstead Town Hall.

One in six parents remortgage a home for their children

 

With interest rates remaining incredibly low and competition amongst lenders producing some of the most favourable finance options ever seen, many are remortgaging in order to benefit from cost savings. Rather than simply easing the financial burden, however, recent research has shown that many parents are remortgaging in order to gift the extra money to their children.

Price comparison website MoneySuperMarket has found that one in six parents who remortgage their home then gift some of that extra cash to their children, with the average financial contribution standing at £9,050 per child and nearly 10% of parents giving over £20,000.

More than a third of the children who receive the financial gift utilise it as a deposit for a property, whilst others use it to go travelling (11%), buy a new car (11%) or pay for ‘everyday essentials’ (9%).

Rachel Wait, consumer affairs spokesperson at MoneySuperMarket, commented: “Our research found that 15% of parents released equity when they remortgaged to help their children. However, you’ll only be able to do this if your property has gone up in value and you’ll need to be sure you can afford to keep up with your new repayments.

“It’s also important to factor in the costs associated with remortgaging, such as arrangement fees which can be as much as £2,000, as well as legal, admin and valuation fees. Try to be realistic – only release equity to help your children with life events if you can really afford to do so.

“Also keep in mind that because a mortgage takes so long to pay back, remortgaging may not be the right option for everyone – there may be cheaper ways of getting a cash sum. It’s important to look at all options and shop around before making a decision.”

Comedy Club with Andrea Hubert Paddy Lennox 

Andrea Hubert and Paddy Lennox will be appearing at The Old Town Hall's Screaming Blue Murder comedy club on Monday May 20th. 

Click here to read Comedy Club with Andrea Hubert Paddy Lennox .

Read our top tips on securing the best possible mortgage

 

It’s practically step one on every homebuyer’s to-do list; get your mortgage approval so you know what your budget is for your property search. However, don’t just stick with your own bank or jump at the first mortgage which is offered to you; follow our tips to help you to get the best deal on your mortgage.

Deposit
Often the biggest hurdle to buying is the deposit itself, but spending more here should save you money in the long-run; the general rule is that a larger deposit will result in a more favourable rate as well as having a favourable impact on credit scores with lenders. With mortgages categorised according to their loan-to-value (LTV) – the percentage of the mortgage as a value of the property – the more equity you have, the lower risk you are to the bank.

Shop Around
It may seem like the easiest option is to simply take out a mortgage with the same bank that you conduct your personal accounts with; however, this will restrict your view on the mortgage market to a single lender. Looking around independently will help you to learn about the mortgage jargon and understand exactly what kind of proposition will suit you best. Comparison services will do a lot of the legwork for you, but remember that some of these require services charge, so if you can, find a no-fee broker.

Avoid bumps in the road
Having your documents in order seems like common sense, but a sure-fire way to having your application declined is to have inconsistencies in your paperwork. If you have recently married or changed address, for example, ensure that your documents reflect the correct details. Whilst you’re updating and verifying your documents, it’s certainly worth registering for the electoral roll as this has a huge bearing on the scoring system for lenders.

Fixed rate or tracker?
Put simply, a fixed rate mortgage locks in an interest rate for a specified time period, whereas a tracker mortgage has a variable interest rate which follows, or “tracks”, an external interest rate – frequently the Bank of England’s base rate. Deciding on which mortgage variant to take out depends on your financial situation; if you can afford to potentially pay higher mortgage amounts should the rates rise, then taking out a tracker mortgage could give you a lower starting rate to begin with. Alongside this, it also allows the opportunity that over the duration of the mortgage, you end up paying cheaper than if you had a fixed rate. If you need to know exactly how much you will be paying each month, then a fixed mortgage could be the best choice to avoid any unwelcome surprises – even if the initial rate is higher than other offerings.

Credit score
Having a great credit score is a huge help when it comes to getting an attractive mortgage rate, as lenders are keen to lend to those with a good history. Also, if you have a smaller deposit then it is essential to have an impeccable credit score, whereas having a larger deposit will result in more leniency if you have a lesser credit score (although you may struggle to achieve “high street” rates). If you want to cultivate the best credit score possible then there are a few steps you can take immediately; ensuring any outstanding debts on credit cards etc. are paid in full each month to show a strong payment history and clearing any outstanding debt are a good place to start.