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This is part one of a two part article detailing the process of buying a property. This section covers from budgeting to choosing a house. The 2nd part will cover making a bid to moving day.
A home (whether it be detached, a flat, a bungalow or a mansion) is likely to be the biggest financial decision and investment that you make in your life. Because of this, it is only natural that you want to make sure that the process runs as smoothly as possible.
The process of buying a house can be complicated or confusing at times, because of this, I've put together this article outlining the steps that need to be taken.
This guide has been put together with UK housing market and UK housing laws in mind, although much of the information may be applied to other markets.
The first step in the property buying process is to decide how much you can afford. When doing this, it is important to remember that there is one off costs to consider on top of the price of a property. These fees can range from a couple of hundred pounds to a few thousand, so they are not insignificant.
When preparing a budget you need consider a number of things. The first being how much (if anything) you are likely to get for your current property. If you are already on the property ladder, it is likely that this will form the bulk of the budget. The second to consider is how much you have in savings or liquid assets that can be put toward the overall budget. After doing this, you need to assess how much you want/need to borrow. At this point, you can combine the figures and subtract any 1 off costs; this then gives you an estimate to work with.
Once you have your budget, it is important to stick within it. Mortgage repayments are typically made over 25 years so it doesn't make any sense to become financially crippled. In addition, it is advisable to only look at houses that are within budget, as looking at higher priced ones may distort your expectations.
Working out the amount you can borrow has become difficult in recent years; the state of the economic climate means banks are less inclined to take risks. To work out the maximum you can get, he general guide lines are (or used to be) 3 times your yearly income, plus one year of your partners salary or 2.5 times your joint income. Deposits generally need to be at least 5% of the value of the house, although in recent times it has been known to be much more than this amount.
The next part of the process is arguably the most exciting part. Looking for a house. This stage of the process can be incredibly time consuming, so don't fret if it takes a long time. There are 2 aspects you need to consider. The neighbourhood and the house itself. It makes sense to do some research into potential neighbourhoods before you start looking at individual houses; the reason for this being that it can narrow the search down quite substantially. You need to consider what you need from an area (i.e. proximity to good schools, local shops...) and make a decision based on this. It's worth remembering that you can modify/change/update a home, but not a neighbourhood.
The next stage is looking for a house. When doing this, remember that aesthetics are not everything. You need to consider practicality and maintenance costs as well as old/new, and whether it has a red front door. Many of the aesthetics can be changed once you've moved in, and remember, that applies to properties that you aren't particularly keen on in their current state.
The next stage is viewing properties. It doesn't pay to rush, but remember time is of the essence and the early bird gets the worm.
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