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Wed 10 October 2018
Are you a first time property buyer?
Partner Tom Carter shares some expert advice on the financial implications of buying your first home!
It’s been another busy month and there is definitely a better feel about the Mid Wales property market. More properties are selling and more people are coming out of the woodwork showing an interest including first time buyers. So, what better opportunity to give first time buyers a few pointers to help you with your first step onto the property ladder?
I could simply rattle through the process of buying a property advising you of what to do; Save for a deposit, try to get a mortgage, view some houses, make an offer etc etc, the list goes on. However for me there is a more important issue to address when buying for the first time and that is the real cost to you the buyer. There are obvious costs but there are also some which get overlooked so my aim here is to help prepare you and prevent any nasty financial surprises.
The first major expense that you will have to address is the deposit. This is particularly pertinent at the moment as the government’s help to buy scheme is now in place and effectively means that first time buyers may be able to purchase using a lower deposit than in the last few years. Generally speaking you will require 5% or more of the purchase price. The amount that you put down as a deposit can have an impact on the products available to you and the interest rate that you will pay on your mortgage and therefore the amount of your monthly repayments.
It is very important to take independent financial advice. An independent financial advisor will look at the entire mortgage market ensuring that they source the most appropriate product for your requirements. Be aware of the other associated costs surrounding your mortgage. These may include arrangement fees and valuation fees which can run to several hundred pounds. If additional or specialist surveys are required then these will of course incur further cost.
You will need to instruct a solicitor to act on your behalf. Shop around, solicitor’s rates will vary and depending on the value of the property but should start from about £350 plus VAT. There may be disbursements and search fees to pay on top.
You may have to pay stamp duty on your purchase. This is the tax payable to the government for buying a home. The amount payable depends on the purchase price of the property with the thresholds currently set as follows: You will pay no stamp duty if buying between £1 - £125,000. £125,001 – 250,000 will incur 1% of the purchase price payable in stamp duty. £250,001 - £500,000 will incur 3% of the purchase price payable stamp duty.
Once you have successfully purchased your home, you need to move in. Make sure you get several quotes from removal firms to get the best deal for your requirements.
As if all of that isn’t enough, the best piece of advice that I can give you is to carefully consider the costs associated with actually owning the property. Running a property can be expensive and with all the excitement of buying your first home it is easy to overlook this.
You will need insurance, both buildings and contents insurance. It is worth noting that you will be liable for the buildings insurance at the point of exchange of contracts.
Furnishing your new home may not come cheap. The cost of filling your rooms with the furniture you require and the white goods that you need can soon mount up!
You must also consider the monthly running costs. These will include your utility bills and council tax which of course varies depending which council tax band your property falls into.
Finally but very importantly, make sure you keep a bit aside for maintenance of the property and an emergency fund should anything go wrong. Trust me there is always something on the “to do” list when you own a property and invariably it will incur a cost! Emergencies could come in all sorts of shapes and sizes, for example could you afford to have the work done should your boiler break down?
So if I haven’t frightened you off the idea, please try and enjoy the process of buying your first home it is after all a once in a lifetime experience!
For further advice please contact Tom Carter at McCartneys 07855 834282 firstname.lastname@example.org