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First Time Buyer
Top 10 Problems and How to Solve Them!

Being a first time buyer can be a really daunting prospect, however our top ten problems and solutions will hopefully keep your first property purchase on track. 

Can't find your problem? Then call us on 0845 838 1763 or email us at enquiries@designsonproperty.co.uk.

Problem One
Can't afford a deposit
Problem Two
Can't afford a property
Problem Three
I can't find a property
Problem Four
I can't find a mortgage deal
Problem Five
Speak to their mortgage advisor
Problem Six
I don't know how much to offer
Problem Seven
My offer was rejected
Problem Eight
Survey - property problems
Problem Nine
My offer has been accepted
Problem Ten
I don't understand the legal paperwork


Problem One: Can’t afford a deposit

Solution: Save, Save, Save and get some help

Very few people are lucky enough to suddenly receive a windfall amount of money that can be used for a deposit.

A few years ago you would have been able to secure a 100% mortgage, but if you haven’t bought yet, it’s important to be glad that you can’t. That may seem an odd thing to say, but if you receive a 100% mortgage, it’s easier to go into negative equity if property prices fall. It’s also harder to get into the habit of saving to put money aside for property maintenance rather than spending everything else you have on making the home look nice.

Saving is hard to do, but there are ways to save and here is a budget sheet for you to fill in so you know where all your money is going and some ways of reducing your expenditure so you can start saving – don’t worry it won’t take as long as you think!

Finally, you can get help from parents and also from developers as new build companies will often pay either all or some of your deposit for you when you buy one of their homes.

Problem Two: Can’t afford a property 

Solution: Consider an area you can afford, buy with a friend/partner or buy into a shared ownership scheme


Interestingly when Kate talks to many people who want to buy and offer to find a solution, they often end up saying ‘we can afford to rent what we want where we want to’ and ‘I don’t want to compromise my lifestyle to save for a deposit. Either that or unfortunately the income that a potential buyer earns, on their own, is unlikely to be enough to purchase a property now, or in the future.

However if you are determined to buy a home, here are some ways of doing so:-

Consider an area you can afford
We all might want to live near work, friends or family and if you are looking to buy but can’t afford this area, then you need to consider how much your desire (and need) to live here versus your desire to purchase a property.

However, what many first time buyers don’t realise is that many homeowners couldn’t afford to buy in the area and home they currently live. Every area has its more expensive parts and cheaper ones. Of course we’d all like to live in the best area, but sometimes areas that are on the ‘fringe’ of good areas are often a lot cheaper, even a few miles away.

For example, Kate needed to live in London while doing an MBA, she couldn’t afford the likes of Chiswick or Ealing which were ideal places to live, so instead bought on the edge of Acton, situated between the two. Although prices have changed (this was the late 1990s!) a one bed flat in Chiswick was £160k, around £140k in Ealing, but in Acton, on the North Circular she paid £89k for a large one bedroom flat.

Near where Kate now lives in the East Midlands, she grew up in West Bridgford, but if you couldn’t afford to live there, you could try nearby Wilford where prices are typically 20% less.

It’s all about finding ‘niche’ areas and the ‘nicer roads’ on the edge of good areas, that allow you to shop, eat out and enjoy the area you want to live, while living only a mile or two away.

The bonus of buying in these areas is that typically they will grow in value more than the area that you wanted to live in, making it possible one day to move to where you actually want to live.

Consider Buying with Other People
Many people buy together as they can’t afford a property on their own. Kate bought her first property in the early 1990s in Croydon and despite being on a good salary and the property only costing £65k, she couldn’t afford it on her own, so bought with a work colleague and friend.

To make a success of this, you need to make sure that you agree, ideally in writing via a legal company, what happens if:-

  • One of you wants to sell out.

  • Either party can’t afford the mortgage (lose job etc)

  • You fall out.

One way of helping to ensure that a split doesn’t cause the other person to have to move out is to try and buy a property where the other room could be rented out (which you can do and earn up to £4,250 tax free). For example if the mortgage and bills add up to £1,000 per month and you both put in £500 each, ideally the rent would be somewhere near this or a bit more to allow the person left in the home to still stay. Alternatively, perhaps a family member or other friend could take on the other person’s mortgage responsibility.

Bear in mind though that you would need to confirm this arrangement with your mortgage lender.

If you do buy together, make sure that you agree what happens to the other half of the property if one of you dies or becomes ill. I know this is a horrible thing to think about, but you can either agree that the other half of the mortgage is paid off, or that it is inherited by another family member.

Shared Ownership
There are a whole host of properties that are now available where you can choose to buy from 25% to 50% of the property and ‘rent’ the rest.

Many people think these are only available for government workers such as the forces, police, NHS, teachers and fire service, however it’s likely that you are eligible if you are on a low, but steady income or are classed as a ‘key worker’. The definition of a key worker does vary depending on the housing scheme, however examples are typically essential services as described above, but also ‘essential employees’ in the public and private sector such as refuse collectors, planners or people that work for universities or in administrative type of jobs.

For more information on key worker definitions, contact your local HomeBuy scheme.

Shift Workers
For those that work shifts, this can be more restrictive as there is rarely the public transport to get you to work during the hours you have to start and finish. In this case it’s likely that you may have to:-

  1. Consider joining together with other people to purchase (friends or family).

  2. Contact and apply for shared ownership schemes (contact your local HomeBuy scheme).

Another way of affording a property is quite drastic, but it might work for you. If you are living in the South East or London/home counties, then you may well be better off moving away from this area and going somewhere cheaper. For example, areas like Peterborough are less than an hour away from London, yet the average price in the city area is around £100,000 – a lot less than you’d pay in London. What you receive in salary may well be less too, but the reduction is unlikely to be anything like the difference in property prices.

Problem Three: I can’t find a property I like

Solution: Keep looking!

Unfortunately at any one time there are less than 10% of the properties that exist on the market, so just because you want to buy now doesn’t mean there is a property for you!

It’s about taking your time and being proactive. Talk to local agents about roads you like, research when the last time properties were sold on that road (look at sold property prices).

There is no harm in writing a very polite note and leaving a number that you are happy for people to have which says:-

   “I’m sorry to trouble you but I’m trying to find a property to buy and don’t see any coming onto the market I like. Your property is one that I would consider should you be interested in selling, then please contact me on ..... Kind Regards..”

You could ask an agent to do this for you, but most people think it’s a marketing ploy and don’t always respond if it’s from an agent.

It is also worth bearing in mind that the main times for people putting their properties on the market are February through to May and then September, so if you are looking outside of these times, it may well be that you need to wait a few months to see what else comes up.


Problem Four: I can’t find a mortgage deal I like

While we are in the midst of a credit crunch, the best mortgage deals are going to home owners who have large amounts of equity or people with big deposits. Typically those borrowing only 60% of the value of their home (so if it’s worth £100,000 the mortgage is only £60,000).

If you are borrowing up to 95% of the value of a property you are unlikely to get the best deal going and you need to decide whether it is the right time to buy or not.

You should bear in mind that interest rates are very low at the moment (Jan 2010) but that doesn’t mean good deals from lenders and they are set to rise. Over the last 10 years interest rates have varied between 3.5% and 7.5%, but in the 1990s went as high as 15%!

If you are struggling to find a mortgage, contact us via enquiries@designsonproperty.co.uk or 0845 838 1763.


Problem Five: The agent wants me to speak to their mortgage advisor

Many estate agents have a company or person they work with that offers mortgage services. There isn’t any requirement for you to speak to them or give them your details.

However, it is rumoured that some companies only offer properties to people that do speak to their mortgage company/partner and at the end of the day, they may find you a deal that you can’t get elsewhere.

As long as they don’t charge for their initial time, are properly qualified and regulated by the Financial Services Authority, there shouldn’t be any harm in talking to them. 


Problem Six: I think the property is overvalued and don’t know how much to offer

In theory we all think that a house is worth £xx amount. In practice we get emotionally involved with properties just as we do with other products. For example, you could buy a polo shirt for just a few pounds, or spend £40 plus on one from Ralph Lauren!

With property, its final value is worth what a seller is willing to accept and a buyer who can proceed with a purchase is willing to offer. This figure might match, it might not!

Practically you can only go on what similar properties have sold for locally in the last few months, or if they were sold in the height of 2007 for example, for 20% as that’s what the market has typically fallen by.

Read our article on How to Value a property. Buy our First Time Buyers' Pack to guide you through the key stages of buying your first home.


Problem Seven: My offer was rejected and I don’t know what to do

It is tough when you make an offer and then the seller won’t accept it, but it is their perogative. There are some stories since the credit crunch of sellers rejecting offers of say £400,000 only to then have to accept ones of £320,000 after prices have fallen.

The best thing to do is don’t panic yourself into increasing the offer. Find out why they rejected it and what price they would accept. Then you need to decide if you think it’s worth paying the extra. If no-one else is interested in the property or no other offers have been made, you could sit tight and ask the agent to let you know if anyone else makes an offer.

Not all agents will tell you another offer is made and they legally can’t tell you how much which is confusing, so you need to keep in contact with them to let you know you are still interested and that your offer still stands.
Buying and selling often works on a ‘split the difference’ philosophy, so if you offer £150,000 for a property that’s advertised at £170,000, the seller will already be thinking about whether to accept £160,000! If they find a property they like and they can negotiate a deal a week or two weeks later they may accept your offer. Kate had an interesting incident in that she actually took one flat off the market over the summer and a previous viewer decided they did want to make an offer as they had not seen anything as good. The agent contacted Kate knowing she was still interested in selling and the property sold even though it wasn’t even being marketed!


Problem Eight: The survey has suggested there are problems with the property

All surveys are likely to suggest some problem or another, especially as most of our houses were built over 50 years ago!

What you need to do is find out:-

1. How serious the problems are and do they need fixing now, or in the next five years?
2. Will the problems stop you from securing a mortgage?
3. What work is required?
4. Do you need to get any specialist surveys done eg timber and damp, electric, gas or structural?
5. How much will the costs be to fix the problems and does this mean you need to re-negotiate the value of the property?

Fixing problems can be quite straightforward and might mean you can negotiate a better price for the property. Just make sure you contact the surveyor who carried out the report, follow up on any advice they give and then deduct the costs of the work from the offer that has been accepted and try to re-negotiate a new, lower price. 


Problem Nine: My offer has been accepted but nothing seems to be happening

This is always frustrating! Often people leave property purchases and sales in the legal and estate agent company’s hands. Not a good idea. It is your property sale or purchase so it’s up to you to make sure that each company is doing what it needs to do.

To know how to progress a sale or purchase, buy our First Time Buyers' Pack to guide you through the key stages of buying your first home.


Problem Ten: I don’t understand the legal paperwork

Don’t worry you are not alone! If there is something you particularly don’t understand, then email your query to enquiries@designsonproperty.co.uk, alternatively find a good time when your legal person is free to talk and visit them or have a list of questions which clearly mark the page number and paragraph you are struggling with.
A good starting point to help you is to read the Home Information Pack first as this is the ‘pre-legal’ work to buying/selling a property so it should help you start to understand the jargon a little more and what you are buying.
 
Essentially the legal work does two things, it checks to see if there are any legal clauses that affect whether you should buy the property or mean you have to abide by certain rules and regulations as the owner. Secondly it transfers the ownership of the property to you if you are buying or from you if you are selling.

Typically there are 10 legal steps required to buy a property and if you want to know what these are and understand the legals better, then buy our First Time Buyers' Pack to guide you through the legalities of buying your first home.

NALS Conference Chair 2016

Kate's Consumer Portal

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