By the end of reading this post you’ll be perfectly set to go out and buy your first property. (if you’re buying a flat, read my blog on leasehold properties) So here we go………
Buying your first property isn’t an easy process to get right. In fact, it’s pretty hard to get right second, third and fourth time. Life is definitely easier if you’re well prepared and have done your research. The one issue I find with research online and on forums etc. is that it’s rarely coming from someone that truly knows what they’re talking about. You can get a plethora of advice that has a quality rating of 2/10 intertwined with parts that are 10/10. Even good ol’ Phil Spencer comes out with some pretty average advice (sorry Phil). Without being an expert yourself, how do you know which bits to follow and which bits not to?
Before I start with the steps to take, I’m guessing you’ve probably already started flicking through Rightmove and have an idea of what you’re after and in which area. If not, get on www.rightmove.co.uk and start looking through the areas you like and seeing what costs what. You don’t need to contact any estate agents at this point. Just look. Once you think what you want exists we go to step one:
1. Speak to an independent mortgage broker. The key points to consider when choosing a mortgage broker to speak with are;
- Are they truly independent? If you ask this, you’ll either get a yes, or a fuddled through answer as to why it doesn’t matter. At this point, it does matter. Only speak to a truly independent broker.
- Will they meet you for an initial chat about your circumstances with no obligation and no fee? If the answer is no, find someone that will. There are loads out there.
- Nothing else about the broker matters at this point.
2. Meet broker. They’ll go through a Fact Find process where they ask a ton of questions. Be totally honest with them. Ask them every question that pops in to your head. They should be very friendly and helpful. (remember, they are selling their services to you. This is where they pitch for your business.). If they’re not friendly and helpful, take what information you can from them and let them know you’ll be in touch.
- A point of note with a mortgage broker is that they’ll be aiming to carry out an agreement in principle for you. This is a credit check with a bank to ascertain how much money (in principle) they will lend to you. This is totally the right thing to do, subject to you liking and feeling you can trust the broker and that the figures he comes back to you with are within your parameters.
3. Let’s assume at this stage that the broker was friendly, super helpful and has carried out your agreement in principle. Once at this stage, you can park your mortgage thoughts and can bat off any approaches and selling techniques to discuss this with you. You’ve got your AIP (agreement in principle) and it’s all under control. You don’t need to sit down with anyone else and I would recommend politely declining any such advances (we’ll get to the mortgage part again at a later point).
4. You now know the general cost of your mortgage on a monthly basis along with the setup costs. You also know the bank will lend you the money (in principle) and where your maximum price point will be. Next is where you have to start dealing with dreaded estate agents…..
5. At this point take 5 minutes to setup a specific email that you can use SOLELY for house hunting. Two benefits to doing this; you won’t miss any potential properties coming up in the rest of your emails. You can delete the address once you’ve moved in.
6. Okay, so we’re at point of actually looking at some properties that fit within budget. Although this process is about bricks and mortar, it is the people that matter. Being nice and polite is important. You will get far more help being serious, but being nice with it. Get in the habit of thanking the estate agent for their time in coming to show you round a property, thank them for the call, thank the owner if they show you round, thank everyone. Even thank people for thinking of you when they ring with a property that is entirely unsuitable.
7. Go and look at as many properties as you can. You’ll get a feel for what you can get for your money. What compromises you may well have to make etc. etc. It’s all starting to become clear in your mind when………..
8. You find the dream house! Nothing in property that involves people moving from their own home will benefit from hard negotiation. Softly softly wins every single time. And nobody feels good at upsetting a little old lady. But you can bet she can be as stubborn as she wants should you insult her with a low-ball offer. If the property is empty, different story. No emotional connection.
9. From here, the more information you have about the seller the better. Ultimately the estate agent wants to know you’re going to perform and complete on the deal ASAP so that they can get paid ASAP. The seller will likely have a few other important factors around their situation that you can help with. The more value you give them in every single other area beside price is what will ensure you get that extra bit of value in the £ department. Remember, hard-ball negotiations do not work.
10. So, go put your offer in verbally to the estate agent. Consider what you’re doing and only do this if you’re 100% serious about following through should the owner say yes. If you mess around an estate agent, imagine the likelihood of them working with you again on any future sale? There will likely be some too’ing and fro’ing at this point. Sellers and buyers almost always work to the process of; 1st offer a little cheeky; 2nd offer very close to their price; 3rd offer has to be a deal. As a buyer, if you go outside of this you probably won’t get the best price and if the seller goes outside of this you’ll probably naturally find yourself a little cheesed off and they won’t get the best price.
11. Offer accepted! Woohoo. What do you do now? Now is the time to find the best mortgage deal. This is where the monthly payment gets decided. So go back to your broker, tell him you’ve found a property and ask he sends you over the best deal possible as of right now.
12. The broker may not be able to offer you the best deal, but they offer the greatest chance of getting the deal through to completion. Differing independent brokers rarely have different deals; but HSBC will and so may your own bank. The difficult thing here is that going direct to a bank you will be dealing with someone that doesn’t have any choice other than their own products and their targets are to get applications submitted. Not always so fussed if your deal doesn’t go ahead after that. Imagine you go through the rigmarole of submitting an application to then discover the bank doesn’t actually lend on flats over commercial premises. But you’ve paid the valuation fee and it’s at that point they find out! Lots of time and money wasted. I’d go with a bank direct only if there is a big difference in prices between them and a broker. You don’t always have to pay a fee to an independent broker; many won’t charge. Some do charge though and can range from £150 to £1500 +. £150 is often fair; they do also get a commission from the lender they place your mortgage with.
13. Choosing a solicitor. This will differ so massively depending on area. My only recommendation is to do a lot of research, get several quotes and pick the solicitor you’ve spoken to that you like and feel comfortable working with.
14…….. I’m going to write another blog that will cover from this period going forward.
As always, if you have any questions drop me an email [email protected] or call on 01202 387718.