If you’ve read my blog posts or tweets, you’ll know I’ve just bought a flat in South West London. I don’t think there was an emotion I didn’t feel throughout the process. Mostly it was scary.
Buying a flat wasn’t what I thought it would be, there were things that were worse than I thought it would be, and other things I’d been obsessing over, were no problem.
Here are seven things I think a lot of first time buyers think, that are completely wrong:
- 1 You need a perfect credit rating
- 2 Student loans don’t impact your ability to get a mortgage
- 3 You need a massive deposit
- 4 The price you see is the price you’ll pay
- 5 You should take the biggest mortgage you’re offered
- 6 You shouldn’t look at properties before getting your mortgage
- 7 You’ll know when you see ‘the one’
You need a perfect credit rating
I spent a lot of my early twenties ignoring the bank who gave me a student overdraft. I moved flat a few times since university and never told them – so didn’t get their angry letters demanding money.
Years later, I rock up to the bank with the money I owed them. They had no clue who I was because they’d closed down my account and sold my debt on. My credit rating was ruined.
I spent the next six years building up my credit rating and becoming obsessed. I wanted to buy a house, but I could only get my credit rating to ‘fair’. Every time I checked (and it was monthly), my heart would sink when it didn’t go up.
When we finally went to buy, I still had a fair rating. It was going to have to do. And you know what, it was fine. It wasn’t hard to get a good mortgage at all.
You have to understand that the figure Experian or Equifax give you, isn’t the official number. It’s an idea of what it could be – but they, or you don’t know what the banks are thinking.
Student loans don’t impact your ability to get a mortgage
Sorry, but they do. If you have one, you’re worse off than someone who doesn’t have a student loan. However – graduates tend to earn more than non-grads, so the extra salary will cancel that out.
Because a student loan isn’t put on your credit file, it’s fine to have a big debt. However, a mortgage provider will look to see if you can afford to make repayments on your mortgage each month – taking into account your student loan payments.
You need a massive deposit
You don’t need 20% plus as a deposit – but it helps. 20% of a house price, in this market is a bit of a joke. Me and my boyfriend managed it, with the help of our parents – but for most people, that number just isn’t possible.
However, you can put down a deposit of just 5% of a property’s value to get a mortgage – and a lender will give you the other 95%.
Here’s the thing, the bigger your deposit, the cheaper your mortgage repayments will be and you’ll have better mortgage deals – so put down as much as you can.
The price you see is the price you’ll pay
Oh no no no no… Lets say the property you’re looking at is a £150,000. What’s brilliant is, you could just afford that £150,000. However, you’re going to have to fork a serious amount more out.
Hear me out:
- Stamp Duty – A government tax on homes costing £125,001 or more – which would be 2% at £150,00 but it goes up the more expensive the property is!
- Valuation fee – Here the mortgage lender will assess the value of the property to see how much they’ll lend you – which can cost between £150-£1,500 based on the property’s value.
- Surveyor’s fee – To get a mortgage, you need a surveyors to see if there are any problems with the property. If the roof falls down, it’s not going to be worth that £150,000.
- Legal fees – Yep, you need a solicitor which will cost you around £1,000 – £1,500
- Electronic transfer fee – This costs around £50, which covers the cost of transferring the mortgage money from the lender to the solicitor.
And that’s just to start! You’ll have leaseholder’s costs, council tax, insurance, repairs. We ended up forking up nearly £6,000 on unexpected repairs.
You should take the biggest mortgage you’re offered
Just because the bank is willing to give you £500,000, really doesn’t mean you should take the full lot. You’ll be stretched to your very limit, and there is plenty to pay for on top of the amount the property is.
If you can borrow less, but down a big deposit, you can lower your interest rate and monthly payments.
You shouldn’t look at properties before getting your mortgage
There is the concern that if you look around at properties and fall in love with one, you may not be in the position (or won’t be fast enough) to be able to bag it – therefore heartbreak.
But take it from me, you need to kiss a lot of frogs to find your prince. Setting up a viewing, then going to the property takes a lot of time. We even turned up before to find the current tenants wouldn’t let us in.
You need to see what’s out there, so you can see what you want – and what you can afford. The more properties you view, the more informed you are.
When you do get your mortgage, you’ll know exactly what is a good deal, and what isn’t.
You’ll know when you see ‘the one’
You don’t. It just doesn’t work like that for a lot of people. For first time buyers, the reality is the property you’re buying isn’t your dream home.
We’d look at a place and think ‘yeah, I could live here’. But it that enough? What else is there? We came close to putting offers down on a few places we liked, but were not sure.
I kept thinking that the one that was different from all the rest I’d be seeing will turn up – like it was a waiting game. But its not really.
You can’t trust your heart in this situation, you need to trust your head. For me, it’s all about the location and the square-footage. Don’t panic if you didn’t get that dizzy feeling you see people on TV get.
Any I missed out? Let me know in the comments!