3 Common Fears Of First Time Home Buyers

It is not surprising to harbour fears about a property purchase if you are a first-time home buyer. The uncertainties you feel might result from the buying process, especially when you don’t have all the necessary information. Indeed, doing anything for the first time may feel daunting, but how well-prepared you are can make things less stressful. A UK survey discovered that about 39,000 Google searches were primarily based on houses listed for sale, mostly by potential first-timers who wanted to check what they could afford. Are you considering buying a home for the first time? If you have some doubts, you’re not alone. Here are three common fears first-time home buyers face.

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  1. Affordability and mortgage rates

Whether you can afford a home may be a fear lingering in your mind. However, it’s quite normal to have such fears. Buying a house is a huge financial commitment, and it’s important to do some assessments to determine your financial capabilities. Often, it is advisable to choose a house within your budget. Settling on a house that costs less than your budget will allow for easy monthly mortgage payments. This way, you avoid situations such as having your house repossessed if you default on your monthly payments. 

Suppose you can afford a high-end home. In that case, you still need to prepare for a rainy day. For example, if you lost your job a few months or a year after purchase, you need a contingency plan to enable you to continue making your monthly mortgage payments. Mortgage rates can fluctuate and significantly impact the cost of your home. Therefore, consulting a mortgage broker from the beginning will be best.

  1. Neighbourhood safety

Many first-time home buyers are also concerned about the safety of the neighbourhoods in which they consider purchasing a home. You may worry about crime rates, proximity to schools, business centres, and other factors that affect your overall safety, comfort, and quality of life. This concern may be even more pressing if you’re considering starting a family or already have a young one. Every home buyer wants peace of mind in the location they choose to live. It might be a waste of money to buy property in an area with a high crime statistic. You can avoid such inconveniences by researching the area before making a financial commitment to the house. If it helps, you can visit the local police to do these vital checks.

  1. Home repairs and maintenance

Another common fear among first-time home buyers is the responsibility of maintaining and repairing the home. You may be worried about the cost of repairs, as well as concerns about what maintenance projects you can handle. If you have DIY experience, that may help quash any fears about buying a home for the first time. You can also research the best professionals you can consult in case you eventually need any help with maintenance or repairs, so you have an idea of their prices and requirements in advance. This way, you can prepare adequately. 

Indeed, all these fears listed above are understandable, but doing nothing about them could negatively impact your home-buying journey. So, in the meantime, how can you alleviate them? First, a good real estate agent can guide you through the process and offer helpful information about neighbourhoods, recommend lenders, or even mortgage products. Lastly, remember to set aside funds for future repairs and maintenance.

Property Investment Mistakes You Need to Avoid

Are you planning to start investing your money in property? Maybe you have started out on your property investment journey recently. Either way, you have probably decided to take the opportunity to put your money into bricks-and-mortar to help see a healthy return on your investment. There is no doubt that property investment can be lucrative, which is why it is one of the most popular ways to invest money. Even in times of economic uncertainty, property investment can deliver returns if you buy wisely. However, putting your money into property is not without its pitfalls. As a newcomer to the world of property investment, it is crucial to be aware of the potential issues so that you can take action to avoid them. With this in mind, here are some of the property investment mistakes that you need to avoid:

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Buying With Your Heart, Not Your Head

Buying a property as an investment and choosing one you would like to live in are two very different things. Choosing an investment property based on how you feel about it is nearly always a mistake. Investment properties should always be purchased based on figures and understanding of the current local housing market. Thinking about the return on investment you will achieve when you sell the property or the rental yield it will generate are crucial considerations. Keeping these two outcomes in mind will ensure you make informed investment decisions. 

Paying too Much for the Property

When you are hoping to make a profit on a property, you mustn’t pay too much to purchase it in the first place. To make a profit, you must ensure you buy the property under value rather than over. Understanding the ceiling price for the area and how the local housing market is performing should ensure you do not overspend.

Overlooking Opportunities to Save Money

As you become more experienced in property investment, you will soon be able to spot opportunities to save money. Carrying out thorough research and seeking out incentive schemes can help you find some excellent ways to make savings. If you have bought a house that requires so much work it is uninhabitable, you may even be able to claim a refund of stamp duty. Looking out for these opportunities will help you find more ways to save money when investing in property.

Spending too Much When Renovating the Property

Renovating your first property is always an exciting prospect. Refurbishing a home can provide some impressive results and can also significantly increase the value of the property. However, many new property investors overspend when renovating homes. Spending more on renovations than you can expect to realise in re-sell value is a big mistake and could leave you making a loss rather than a profit. Understanding how much the property will be worth after renovations are completed is essential before you start work. Based on these figures, you can set a realistic budget and contingency fund that allows you to make a profit.

What’s the Difference Between A Freehold and Leasehold Property?

When buying a home, you may come across the two terms ‘freehold’ and ‘leasehold’. It’s important to understand the difference between the two as there can be different costs associated with each. This post explains exactly what freehold and leasehold properties are and the important difference between them. 

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Freehold vs leasehold explained

The difference between freehold and leasehold all comes down to land ownership. When you buy a freehold property, you own both the property and the land. When you buy a leasehold property, you own the property, but not the land it’s built on.

The terms are also different in both cases. With a freehold property, you have ownership of the property until you decide to sell. With a leasehold property, you have ownership for a fixed term until your lease expires or until you sell. Unless you renew your lease, you will lose ownership of your home. That said, most leases are very long and never need to be renewed. 

In the UK most leasehold properties are flats, while most freehold properties are houses. Of course, there are exceptions, so you need to be wary when buying a flat or house not to assume that it is leasehold or freehold. 

What is ground rent?

Because you do not own the land when moving into a leasehold property, you’ll usually have to pay an extra fee called ground rent. This can vary in cost, but is usually not too expensive – the average ground rent is between £200 and £500 per year.

Some leasehold owners charge very low ground rent rates of as little as £1 per year. This is often known as ‘peppercorn’ ground rent, Some leasehold owners may not even bother to collect peppercorn rent, meaning that you essentially don’t have to pay anything. Such leasehold properties are worth looking out for. 

Is a service charge the same as ground rent?

Many apartment blocks will also ask for a service charge, which is different from ground rent. The service charge covers maintenance of communal and shared areas of the apartment building. The service charge and ground rent may be billed together, or billed separately. 

What are your rights when it comes to renovating?

With a freehold property, you have the right to make any improvements you want, providing that they’re legal and permitted by your local planning committee. This is typically what people think about when they think of home ownership.

When renovating a leasehold property, there are likely to be more restrictions when it comes to renovating. In some cases, it can be just as restrictive as renting – you may not be able to make any structural changes and may even have to ask permission to make minor improvements. That said, you’re more likely to get permission to do things like painting walls, replacing flooring and hanging up shelves than you would renting.

What are the benefits of a leasehold property?

It may seem that there aren’t many benefits to leasehold properties compared to freehold properties. After all, you have a set lease term, you have to pay ground rent and renovations are more heavily restricted. 

However, leasehold properties do still allow you to build equity and get your money back when you sell. You can also rent them out as you would with a freehold property. Compared to freehold properties, they can also be cheaper to buy overall. All in all, a leasehold property is still better than renting. 

Signs That You’re Prepared To Buy Your Very First Home

Being ready and able to buy your very first home is a huge milestone in life. It takes a lot of hard work, dedication, and responsibility to be able to afford even the deposit for a house. Paying off your mortgage is usually a long-term commitment that will take up a lot of your life. As such, it can be an extremely daunting process.

So in this post, we’ll be explaining a couple of signs that show you are certainly ready to buy your very first home.

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You’ve paid off most of your debts

Your financial circumstances play a huge role in when and if you should buy your very first home. If you haven’t paid off most of your debts yet and aren’t on track to do so, then you should absolutely focus on getting your finances in order first.

You know that you have job security

Job security usually means that you won’t be made redundant or replaced in the foreseeable future. It can also mean having skills and experience that are heavily sought after in the industry, meaning it’s easy for you to find a job should you lose your current one due to circumstances that are outside of your control.

You’re already doing your research

If you’re already doing plenty of research into mortgages, finances, locations, and even schools for your children, then it’s a good sign that you’re prepared to take on a mortgage. You should also look into specialists such as a mortgage broker or even financial advisors that can help you get your books in order to see how much you can afford each month. This can be a long process, but it’s extremely informative and will help you make better decisions in the long run.

You have plenty of savings

A mortgage deposit can easily be anywhere from 5% to 20% of a home’s market value. This is a huge amount of money that most people don’t have lying around. Start saving money now and you’ll find it easier to stomach a big deposit.

Your credit score is looking great

A good credit score means good mortgage rates. Before considering to buy your very first home, check your credit score in advance of researching mortgages to see what you could be eligible for.

You know where you want to live

If you’ve done research on where you want to live then it’s a sign that you’re prepared to choose a location. A lot of people find it hard to pick somewhere to live, so it pays to do your research and make up your mind ahead of time.

You’re thinking about starting a family

If you’re starting a family then you probably want to move into a larger home with more space, especially if you want to have several children.

You’re content with your career

Mortgages require you to have long-term stability and this includes your career. Making frequent switches can result in periods of no or little income, so make sure you’re content with your career so that your financial situation is stable and predictable.

You’re ready to take on the future

Of all the factors to consider when buying a home, one must be prepared for the future. This means a life away from your current conveniences, friends, and family members. It can also mean a life with your new family, and it could even involve starting a new job in some cases. If the idea of change is daunting, then you may want to hold off moving home.

5 Tips To Make Your First Home a Little More Affordable

Your first home is probably one of the biggest expenses to save up for in your life. A typical mortgage deposit can be anywhere from 5% to 15% of the home’s full value which can easily be tens of thousands of pounds. It goes without saying that you should try to reduce the amount you pay for your first home to make it more affordable, and luckily there are a bunch of different ways to do this.

So here are a couple of tips to help make your first home a little more affordable.

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1. Be more selective about where you purchase a home

It’s a good idea to be a little more selective when purchasing your home. Some areas can be much cheaper than busy places like central London, and even homes on the outskirts of major cities can be extremely expensive due to being in prime locations with great amenities. So unless you really want to live in a specific part of the country, we suggest trying to be more flexible with your location.

2. Check your mortgage eligibility

If you’ve got a great credit score then you have a better chance of getting a nice big mortgage for your house. This means you can afford a larger home or one in a location that you consider to be a prime choice. You’ll want to work with a mortgage broker to help you scout out the best deals, but you can prepare by getting a credit check with one of the major companies such as Experian, Equifax, or TransUnion.

3. Consider first home schemes

The government actually offers a First Home scheme for first-time buyers. With this scheme, you could get up to a 50% discount on the market value of your home. However, there are a couple of conditions that need to be met before you can claim this. For starters, the home must be a new one built by a developer or it must have been bought with a First Home discount in the past. You must also be eligible for a mortgage and your income must be below a certain threshold.

4. What about renovating a run-down property?

You can actually save a lot of money by using less conventional methods to get a home. For instance, you could consider renovating a run-down property. Buying this kind of property is fairly cheap, but the costs of renovating it can add up if you’re not careful. This requires DIY knowledge if you want to keep the costs low, but it can work with contractors too if you’re smart about your expenses.

5. Ask how much home you really need

There are many questions to ask before buying a home and you should always re-evaluate your needs and preferences to make this a bit easier. For instance, do you really need guest bedrooms? Do you really need a large garden? Does it have to be detached? Consider these questions and you might find yourself saving a lot of money.