First Time Buyers what they should really know
First-Time Buyers should know how stressful and costly the process of buying a house could be. I cannot see any reason why it has to be any different from purchasing a car or any other item that cost a lot of money, and yet it is. If you buy an expensive piece of jewellery, for example, this bracelet, which is worth £195,049. You need to write a cheque, put it on your credit card or pay cash.
First-time buyers bracelet
Now, if you are going to buy a house, there is much more involved. First of all, you need to find a house. For this, you go to an estate agent. Easy enough, walk along any high street, and there are usually three or four estate agents all wanting your custom. Alternatively, look online at a number of online property websites. If you are a first-time buyer than you enter the housing chain at the bottom of the pile, which means that you are purchasing the least expensive house in a chain that can result in a million-pound purchase for someone at the top of the chain.
Getting a Deposit the First-Time Buyers
Unlike the bracelet mentioned above, you may not have £195,049 just laying around. Which means you will need to borrow the money from a bank or building society. To do this, you will need to have a deposit, as these institutions will no longer loan 100% of the value of a house. This deposit is generally 10% of the value of the house but can range from 5% to 20%. Let’s assume that your first house is going to cost you £207,693 (according to the Halifax Building Society this is the average cost of a first-time buyers house, £12,644 more than our bracelet above). So, 10% of £207,693 will be £20,769. The average household income for first-time buyers is £35,635, and they spend on average five years saving for the deposit. First-time buyers also borrow on average £10,000 from the bank of mum and dad (according to The Independent)
You would think that once the deposit has been saved, you have the money from Mum and Dad. The next process would be simple quick and easy.
Well, it’s not, this is when the hard work starts, and you find that everyone you meet is standing there with their hands out wanting your money. First-Time buyers will not pay the Estate Agent, which is probably the only saving grace for an Estate Agent. Estate Agents don’t enjoy working with first-time buyers. They are an essential aspect of many purchases in a property chain, but first-time buyers are treated the same way as a throwaway product. You know those products, they get people in the door to buy more high-end purchases.
The House
Looking for a house for a first-time buyer is tough. There are so many beautiful houses for sale, and your expectations are high. You look at your parent’s home, your rented home or that of your friends. You want and expect the same type of home. The same space, the same furniture and well, the same lifestyle. Unfortunately, this is NOT going to happen.
For a start, they have all probably had two or three homes. They have also been on the property ladder for a number of years. You are a first-time buyer, and as such you get the runt of the litter. There is nothing wrong with the runt, but your expectations have to alter. A first-time buyers house will be small. When I say small, I mean small.
The second bedroom, if there is one will be the size of a double bed, or maybe a little bigger, but not much. You might be able to fit in a wardrobe or chest of draws, but that’s it. The Master bedroom will be able to fit in a double bed, wardrobe and chest of draws and you may even be able to walk around the bed. Don’t expect an au-suite. Your bathroom will have a bath with a shower attached to the bath, a sink and a loo. Not much else. Your kitchen will be small, one person in the kitchen and it will be crowded. The living room will be compact. You may get a sofa in, but don’t expect a sofa and a chair.
Remember you will need to find a place for the television and a small table to rest your coffee up on. If you are very, very lucky, you may have a dining room. Otherwise, you are eating on your knee for the next few years. Your garden will be small but manageable.
The Mortgage
Once you have found a house within your price range, and I say within your price range as this will not be your dream house, then the hands start to extend for your hard-earnt money. First of all, you will need to find a mortgage provider. Most offer their services for free. However, you will need to bear your financial life to the mortgage provider. They will want to know everything about you, your job, your income, savings and your inside leg measurement. It is stressful. This whole process can take up to 6 weeks.
You might be offered a mortgage in principle. It is in principle as they don’t know which house you are going to buy. Alternatively, you may have a house in mind and go to the mortgage company with that purchase, and they will take all the details you have and then ask for your inside leg measurement.
The mortgage is only offered in principle as they will want to check the house out. The mortgage company will do their survey on the property. Primarily to ensure that if you don’t repay your mortgage, they will want to get the property from you and sell it to cover the mortgage. Therefore, they need to ensure that the property is worth the money they are leading to you. This survey is generally free. However, if you put in an offer on the house and or some reason the house sale fails, you will need to pay for the next survey yourself. At the cost of around £300, depending on the mortgage company.
Your Surveyors Report
In addition to the Mortgage company doing a survey, it is advisable that you conduct your survey on the property. Everyone will be telling you to do this and will advise you to do the most comprehensive survey on the market. It is easy for them to tell you, it isn’t their money they are spending. There are four types of surveys on offer.
- Condition Report – the condition of the property with any risks and potential legal issues with any critical defects identified. The cost to the first-time buyers circa £250 + VAT
- Home Buyers Report – identify structural problems including subsidence and damp. The cost to the first-time buyers circa £400 + VAT
- Building Survey – in-depth analysis of the condition of the property and advises on defects, repairs and maintenance. The cost to the first-time buyers circa £500 + VAT
- Building or Full Structural Survey – an amalgamation of all of the above. The cost to the first-time buyers circa £800 + VAT
You decide on which survey you want. When you are saving your deposit, you will tell yourself that you will go for the best, but when it comes to it, £800 + Vat is a lot of money and can represent two- or three-months savings. It is your call.
The survey, in my experience, is a tick list of the surveyor covering his rear end. They will note everything that is wrong with the property. Just in case anyone decides to sue him or her because the property was damaged, in need of repair or any other issue. The report will be a perfect dissertation on house construction. They will advise on how to re-plaster walls, tell you the house has damp (all houses have a certain amount of damp) and other bits and bobs.
Once you have the survey, you will then need to read it, and then get someone to interoperate what the report is telling you. It is worth the cost no, do you need to get it done, just in case yes. A survey will be the final straw in deciding if you want to buy the house or not.
The Solicitor
Then you will need a solicitor. To purchase a house, you are looking at about £850 + Vat. The solicitor will be very helpful to you, but you will have to chase for updates. The solicitor’s work will take about six weeks. The first job you have to do is sign a contract with the solicitor and agree on prices. They will then start to work for you, but you will need to send them a cheque, generally about £300 before they do anything.
The solicitor will then start to run additional checks on the house at an extra charge to you:
- Land Registry to ensure the house is there and that the garden belongs to the house etc. A fee circa £270.
- A drainage enquiry. A fee of circa £30.
- Then there is the cost of Local Searches, to see if there are going to be any power stations etc. built next to your new house. A fee of circa £112.
- Then there is the cost of Land Transaction Return Form. A fee of circa £65 + VAT
- Cost of Telegraphic transfer (sending the money to the seller of your house) £40 + VAT
The Government has its hand out
The government has its hand out when you are buying a house. For the average house purchase of £207,693, you won’t pay stamp duty. This only applies to purchases over £300,000. Therefore, any house over the value of £300,00 will have to pay a fee of £5% (Basically £50 for every £1000 added to the cost over £300,000).
More Costs for First-Time Buyers
There are even more costs. You then have movers that will move your positions from your current home to your new house. Also if you are doing this yourself, there is a cost involved.
In conclusion, it appears that if you don’t have enough money to buy a house, then you have to spend more money to get that house. Those with money don’t appear to have to spend as much. The UK has a system of house purchase that is created to ensure that no-one is able to get ahead unless you pay for it.
The purchase of a house in the UK is outdated, complicated and to be frank, a disgrace to this country and anyone who is trying to make a life for themselves.
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