Guide to Buying a New House in the Uk 2021
Looking to buy a house for the first time? If this is something you’ve thought a lot about, then you have many preparations to make. Otherwise, you'll be swamped by responsibilities. No worries, we've got everything you'll need right here in one place. That way, you can quickly brush up on all the facts. Then, the rest will be a breeze.
So, what's a lad got to do to get themselves a new home now? Well, thanks to a few programs, homeownership might be closer to reality than you may suppose. But, before we move any further, let's review a few essential concepts. By keeping these in mind, you'll steel yourself for the obstacles ahead.
New House Checklist
- What Can You Afford? Above all, you must answer this question with honesty. Suppose you purchase a house over your budget and can’t afford the monthly payments. Then, even if you move into the home, you won't be there for long. Luckily, with today's low rates, homes are surprisingly affordable.
- Applying for Your Mortgage:To obtain financing, you'll have to apply for credit. When purchasing a home, we refer to these loans as a mortgage. In today's markets, there are many different mortgage options available.
- Building Vs. Buying?Sometimes, it may make a bit more sense to build a home rather than purchasing one. You'll have to look at the specifics of each situation before rendering a judgment.
- Making an Offer: Once you have your financing in place, you'll search for the perfect property. After a while, you'll come across the ideal location. Then, you start negotiations. At this point, making an offer is the next step.
- Moving Into the Home: Once you finalize the exchange and your mortgage paperwork is complete, you can move into the new home. For us, this is always the most exciting part. Ensure that you have planned ahead. Home removal can be a lot of work.
- Homeownership: Now, you are the proud owner of your first home. From this point forward, you've got a whole new suite of chores to handle. If you don't, the property may not worth much upon resale. Luckily, we've got some advice.
Throughout the home buying process, you'll be in touch with a number of professionals. Keep track of them as they each serve an important purpose.
Your Team of Specialists
- Lender: The lender gives you the financing necessary to purchase your home. During the process, you'll have to submit numerous documents to them. Stay in touch to keep things moving along.
- Insurer: Your insurer will be responsible for walking you through the insurance process. With a mortgage, lenders almost always require insurance to protect their investment. Otherwise, if the property was destroyed, they would lose their collateral.
- Conveyancer:Towards the end, your conveyance will transfer the property from the previous owner's holdings to yours. Only after that will the property be yours.
- Surveyor: Before finalizing the exchange, a surveyor inspects the home. With many mortgages, homes must meet certain requirements. If not, the lender won't fund the mortgage.
- Broker: These fellows help you compare different mortgage options. By showing you several different offers, finding the best rate is a breeze.
- Estate Agent: While you are purchasing a home, the estate agent handles the legal side of negotiations. That way, you won't have to work the process alone.
Figuring Out the Budget
Before you start shopping, consider what you can afford. Purchasing above your means would put you in a bind. In our experience, it helps to work these things out on paper. That way, you'll have something to look at in front of you.
Besides the mortgage, plenty of other expenses accompany homeownership. Don't forget about them. Otherwise, they'll sneak up on you.
Consider All the Potential Expenses
- Stamp Duty in England: These taxes add up for property holders. Typically, they scale along with their value. So as the mortgage increases, so will this.
- Land Transaction Tax in Wales: If you happen to live in Wales, you'll pay this instead of the Stamp Tax.
- Getting Up-to-date Surveys / Reports: For most mortgages, homes require a clean bill of health. To acquire one of those, you'll need to pay for a survey.
- Conveyancing Fees: Once the exchange concludes, the conveyance transfers the property title.
- Building Insurance: Since homes are such a large investment, insurance is vital. Without it, a small accident could ruin you.
- Moving Costs: Even after the exchange, you'll need some cash. Unless you are a hermit, moving costs add up.
- Home Repairs or Improvements: Perhaps, you found the perfect home but it needs a bit of work. Even if this is the case, it could be a great deal. Just don't forget to set aside something to cover the repair bills.
- Mortgage Costs: After moving into the new home, you can say goodbye to your lease. However, you'll be paying the mortgage note now. Ensure that you always make the payment on time. It helps to stay in the lender's good graces.
Applying for Your Mortgage
After figuring up your budget, you can start to apply for mortgages. Generally, we've found brokers to be the most helpful. By working with one of them, you'll receive several offers. Compare their different merits. Then, make a selection. Most of the time, we suggest choosing the one with the most competitive interest rate. As long as you can afford the monthly bill, you'll save more in the long run.
Of course, if you'd like the best mortgage offers, your credit needs to be superb. If it is a bit on the lower end, that does not mean you can't purchase a home. However, without stellar credit, your mortgages might be a bit more costly.
- Improving Your Credit: Improving your credit isn't all that complicated. By paying your bills on time, it'll go up naturally. Plus, if you minimize your credit utilization, it'll receive a boost as well. The better your credit score becomes, the better your mortgage offers will be.
Different Types of Mortgages
Mortgages give people access to financing. Without that, many people wouldn't afford a home easily. However, resist the temptation to snag the first offer you come across. Often, comparing offers yields a more fruitful partnership in the end.
To make things simple, we suggest contrasting interest rates. In the long run, these play an outsized role when it comes to your home's affordability.
Interest Rate Types
- Fixed Rate: These are among the most transparent packages to understand. In other words, what you see is what you get. When you first start the payments, they will be the same as they will always be. That way, nothing unexpected ever crops up.
- Variable Rate: Occasionally, interest rates vary over the life of the loan. Most of the time, these tempt people with smaller payments early on. Nevertheless, since the rates may change, those payments could increase at any point. Thus, if you choose a mortgage like this, ensure you are ready for anything.
- Capped Rate: On the other hand, a capped rate mortgage offers a bit of both. With one of these, your payments start a bit smaller. Of course, the interest rates may vary. However, compared to a variable interest rate, there is a ceiling on how high these may go. That way, even if things do increase in cost, it is not game-changing.
How Much Do You Need for a Downpayment?
For first-time buyers, their deposit tends to be the most daunting part of the whole process. All in all, a down payment doesn't have to be so intimidating. With the right programs, you can put a fraction of the home's value down. Your mortgage lender can help you find just the right program to fit your unique situation.
- For First Time Owners, You Can Put As Little As 5% Down: Boris Johnson authorized new spending bills that support first-time home buyers. Through these programs, you can purchase a home with as little as 5% as a deposit.
Once you have been approved for a mortgage, it is time to start shopping. At this point, you'll know what your budget should be. So, with that information in mind, peruse the market. Once something catches your eye, it'll be time to make an offer.
Factors to Consider
While searching for a property, think about how life would be if you lived there. That way, you'll form realistic expectations about homeownership. We suggest using the following metrics during your research.
- Commute: The further away your home is from work, the less of it you will see. Therefore, even if you love the place, a long commute might be a deal-breaker.
- Affordability: Of course, if you had an infinite budget, finding the ideal location wouldn't be a struggle. However, it is imperative to stay within your means. Otherwise, homeownership will be more stressful than anything else.
- Living Area: For your family to live comfortably, how much space would you need? While shopping, look for somewhere with enough room to accommodate everyone. Otherwise, tensions could boil over.
Searches and Surveys
Once you find somewhere suitable, it is time to move on. The next step on the path would be contacting a surveyor. These professionals look at homes to determine if they need repairs. That way, you don't purchase a home with a ton of damage unknowingly. Refer to your UK new house checklist if you get lost.
- Searches Are Required: Without one of these, your lender might not allow you to finalize the deal. Thankfully, this is for your own benefit. Since you inspect the home, nothing should surprise you after assuming ownership.
- Surveys Provide the Buyer Protection: Had you forgone such a survey, think of the potential consequences. After settling into the new pad, what if a pipe burst? Without inspecting the property thoroughly, such occurrences are a tough prediction. Often, properties look magnificent on the surface. Yet, underneath such cosmetic perfection, numerous defects lurk hidden to the naked eye.
Exchange and Home Removal
Finally, after going through all the legal hoops, you are at the last step. At this point, you've made an offer, and it was accepted. Next, you just got to sign your name on the dotted line so that everything is official. Until that point, the property won't be yours legally. Luckily, as long as you've done everything correctly so far, this is among the simplest parts.
- At the Exchange, Everything Is Finalized: Before proceeding, assess your situation. After this moment, there won't be any going back. Thus, if you have any last-minute questions or concerns, now would be the time you should ask them. Otherwise, you must forever hold your peace.
- Then, You Can Start Your Home Removal: After signing everything, the conveyancer will transfer property ownership. Then, the place will be yours. Once that is all taken care of, you can start your home removal process. If you have more than a few belongings, we recommend hiring a few hands. That way, you won't strain yourself while relocating. If you had to ask us, that would be a rather depressing way to celebrate the new home. Luckily, with a few helping hands, you'll avoid such a fate. Then, celebrate with your mates and a meal in your new home.
Settling into Your New Home
After moving all your belongings into the new home, it is time to settle in. From now on, you are no longer a tenant. With your new home, you can make your dreams come true. Let's say you would like to install something in the living room. Now, without asking your landlord, you can do just that. You should have checked every box on the new house checklist. As long as you followed our guide to buying a new house in the UK 2021, you'll be in decent shape.
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