Tips for Buying your First Home

There is no end of information available with tips on how to buy your first home, to the point that I have wondered if I really need to add to the plethora of information available on the internet, but as a Mortgage Adviser myself and Director of a successful Mortgage Advice company, I felt I had to add a bit of my perspective into the mix. Every day I advise lovely people at all ages and stages on how to buy a property, so let me shed some light on the process.

Firstly, there is no embarrassment in not having a clue what to do when it comes to buying a home. It can be a daunting process, from knowing how to get a mortgage, what a mortgage even is, to negotiating with estate agents. I deal with clients in so many walks of life and professions who have skills and knowledge in areas that I wouldn’t have a clue about, yet often they feel embarrassed for not knowing more about mortgages when I ask them….even those who already have a mortgage. When you come to me as my client and want to know about getting a mortgage, I want you to feel comfortable to admit what you don’t know and I can help fill the gaps.

Before sending more tips for buying a home into the google stratosphere of tips for buying a home, I thought I would try to think of some less talked about angles, but ones that are really important and that I discuss with my clients every day in my Mortgage Advice meetings.

So, in no particular order:

Find out early how much you can borrow on a mortgage.

It’s never too early to find out how mortgages work and how your current position helps you to get a mortgage. In particular it can be highly motivating once you find out how near or far you are to getting the mortgage that you need, to live where you want. Kicking your plans into action and making those all-important changes in your life to increase your options. It might be that you find out that your current income and job isn’t enough to get a house in your local area, this doesn’t need to be a negative, it could inspire you to look for alternative employment or explore a new area to live in.

It might be that you find out that your current level of debt is holding you back, or the plans to get a new car lease will reduce the amount that you can borrow on a mortgage, meaning you have a nice car and still no house. Understanding how these decisions affect your potential for a mortgage can help to motivate you to rethink your priorities and budget, and reduce your monthly outgoings.

As a Mortgage Adviser myself, I don’t like having to disappoint a client when I know the property that they have in mind is financially out of reach. The best part of my job is when I can deliver them good news, often my clients are surprised to hear that they are in an even better position with getting a mortgage than they had expected. Here are a few tips from me on finding out how much you can borrow on a mortgage:

• Start early and speak to a Mortgage Adviser, tell them your time-line for buying a home. I will always give potential clients the time they deserve to understand their mortgage options, even if they aren’t looking to buy a home straightaway. This gives them the best chance of being ‘ready’ when the time comes and avoids disappointment later on. I am always surprised how fast time goes between me first speaking to a client and then hearing from them again when they have been busy putting plans into action, whether it is increasing their savings for a deposit, reducing their outgoings or even securing a new higher paid job.
• Remember your own bank might not be the right bank for you when it comes to a mortgage, ok being honest, sometimes it is the right bank too, but if you ask a good Whole of Market Mortgage Adviser for advice from the outset, they can include your current bank in their research and compare what they are willing to offer you against others. It may be that a different lender can offer you greater levels of borrowing, even if it is just that little bit extra that you need to secure the home that you are after. Another lender might also offer lower interest rate or fees, saving you valuable pounds and, in some cases, they might require a smaller deposit from you. Let a good Mortgage Adviser compare your options and give you the confidence in the right lender for your particular circumstances.
• Don’t make any big changes to your circumstances without checking how they impact on your potential to borrow in the near future. When considering a change of job or a new financial commitment, check with your Mortgage Adviser first. It may be that you are a Self-Employed Sole Trader and looking to change to a Limited Company Director, or leave your job and become Self-Employed. These decisions can delay your plans to apply for a mortgage by several months or even years, if done at the wrong time.

So, plan early and if your goal is to own your first home or move on to the next bigger home in 6 or 12 months or even longer, speak to a good Mortgage Adviser and ask for a free initial assessment of your circumstances. I will always give an initial assessment to my clients for no charge and there is no expectation of how long a client should take in putting that plan into action. I build a relationship with my clients that they can trust and choose to come back to when they have more questions or are ready to move to the next stage of buying properties.

Next an important part of the homebuying process once you have been told that you can get a mortgage is the exciting part of looking for houses, this is also when you might find yourself dealing with Estate Agents for the first time in your life. So what can you expect?

Know that there are good, bad (and ugly) Estate Agents

No surprises there I know, and within any branch of estate agents there will be good or bad ones to deal with but I am talking about the ethics within an Estate Agency that influence how they treat you. Usually, where there is a chain, the ethics are similar in different branches and dictate the way they approach engaging with you as a potential buyer (or seller).As a potential buyer, some Estate Agents capitalise on your lack of knowledge and to cut a long story short, they make money out of you as a result. Whether it is implying you need to use their in-house mortgage adviser, or their preferred solicitor with reasons such as ‘it speeds things up’, ‘most people do’, ‘it is expected that you use ours’ this is not true! There is no need to use the mortgage adviser that the Estate Agent is recommending to you nor their solicitor. I say to my clients, why disclose your buying power with the people you intend to negotiate with?

Where it is being suggested that you use the solicitor that they recommend, while some may offer a good service, in the worst of examples, the solicitors in question are not even solicitors, but simply refer you to another solicitor, taking a referral fee in the process that often comes as a hidden cost to you.

In my experience, the good Estate Agents are often the smaller, privately owned local firms where you often get to deal directly with the owner as part of the sales negotiation. The owner has a vested interest in every potential sale that they are dealing with and they tend to be more transparent than the ‘Sales Negotiators’ in the bigger chains. There are lots of examples of Estate Agents who have adopted a self-serving approach to selling houses and this can leave you as a potential buyer feeling like a cheap porn in the process. Smaller agencies usually do not try any heavy-handed referrals to their mortgage adviser or preferred solicitor and in a lot of cases will only recommend one if you ask for their help.

I often see that first-time buyers or those looking at lower value properties are treated with less respect than those who already own a home or are looking at higher value properties and this is a real shame. I help my clients to be equipped for those encounters and conversations and offer additional support when it comes to making an offer. I also take a pro-active role in dealing with the Estate Agent once my client has had an offer accepted to give the Estate Agent and person selling their house (the ‘Vendor’) the confidence and transparency to know the Sale will be progressed. This can be a frustrating stage of the journey for Estate Agents and vendors once an offer is accepted in good faith and time wasters will often not fulfil their duties at this point, wasting valuable weeks in the process and messing everyone around. I help my clients AND the Estate Agents so no one has their time wasted.

So, a few of my tips for dealing with Estate Agents include:

• Do your preparation before approaching an Estate Agent including finding your own Mortgage Adviser, someone who is on your side and ideally can support you in approaching Estate Agents, know what your financial borrowing potential is and don’t divulge this to your Estate Agent or you will give away your negotiating position.
• Be ready for the Sales Tactics by the Estate Agent. Of course we understand the need for some of them in getting their client, the Vendor the best price for the poperty, but some cheap tactics are more than unecessary, from other viewers ‘accidentally’ turning up at the same time, to delaying coming back to you on your offer while they try to bump up other offers, so be be clued up to these techniques. The good Estate Agents will manage your expectations including coming back to you at the end of the day if the vendor needs more time to consider your offer. They appreciate that a night can seem a long time to be waiting to hear back. Don’t be frightened to withdraw your offer if you feel it is being used to bump up offers on more viewings. You can do so politely and express your interest in returning to make an offer when the other viewings have taken place.
• Don’t feel under pressure to use their Mortgage Adviser or recommended solicitor. Remember they are recommending you this as they will be paid a referral fee and percentage of commission for each successful referral, it is a lucrative way of generating additional money for the Agency. Trust Pilot can be a good way of doing some research yourself as to the quality of the company that you are being recommended to. If the company doesn’t feature on Trust Pilot, there may be other ways to find out their reviews also.
• Do find out more about the circumstances of the vendor, as well as the Estate Agent and vendor knowing your position when you are making an offer, it is reasonable to ask about theirs. It is just as important to the process for you to get a sense if the person selling the house (the ‘vendor’) and their circumstances, fill you with confidence and fit with your hopes for timings. Finding out how long a property has been on the market for, other offers being considered, other planned viewings and the position of the vendor such as have they bought a house already or will they be moving to new build (when is the expected completion date) and other factors that I talk about more in my blog ‘How to successfully negotiate buying a property’.
• Don’t accept being treated badly by an Estate Agent the good Estate Agents respect the fact that even though their client is the person they are selling the house for, you are a potential client of theirs too. Whether it’s responding to your calls and offers and managing your expectations, a good Estate Agent will get these basics right. This is an area that I find some of the Estate Agents with a higher turnover of staff simply can’t compete with, it is likely that you will get a better service and more respect from the established small local agency. Be prepared to walk away from a deal if you feel you are not being treated fairly, there will be another house and a great Estate Agent just around the corner.

My final tips for buying your first home are:

Spend wisely and Budget – Not only will this help build up your savings for a deposit, it will help you to adopt positive lifelong spending habits. If there is one thing the last year – 2020 – has taught us, we never know what is around the corner, there is a balance to strike when we come out the other side with living life to the full, making new memories but not spending to excess. The latter often leads to borrowing on credit cards and eventually consolidating debts with personal loans that can quickly add up and at worst, lead to mismanagement of your debts that lead to bad credit. In the long term this can have a detrimental effect on your ability to get a mortgage and be a vicious cycle that you can’t get out of. Spending wisely does not mean you can’t buy the nice outfit, or have a night out with your friends, it just means you have to know where your compromises are and how you can enjoy all of the things that make you feel happy while being motivated to achieve your end goal of buying your first home.

Choose the right person to buy a home with – Getting a mortgage and buying a home is an expensive process, it is a long-term commitment, the decision of choosing who you should be doing it with should not be taken lightly. By taking a joint mortgage out with someone, you are creating a financial association between the two of you that could take many years to undo if it goes wrong. With the best of intentions, the process of buying a home and living together comes with great stress that can test any relationship or friendship. The process of undoing the financial tie later down the line if all goes wrong, can leave a real mess behind, someone can be stuck on a mortgage for many years after they have wanted to get out of it. It is not an easy commitment to walk away from and can be expensive to repay a mortgage early, with an early repayment charge, solicitor fees and estate agency fees. When you become party to a mortgage you are jointly responsible for keeping up repayments on your mortgage, you can’t elect to only pay half or less if either of you enter into financial difficulties unless the other party is willing to step in and pay more. Failing to keep up repayments on the mortgage, whoever is responsible, has a detrimental impact on both parties and your home can be repossessed. You might be prevented from moving on in your life and getting a mortgage with someone else in the future.

Being supported through the home buying process can save you hundreds if not, thousands of pounds, particularly over the life of a mortgage. Getting a good Mortgage Adviser on your side can be a relationship for life that will add value and confidence each and every time your mortgage needs to be reviewed or your aspirations change. If you would like to see how a member of The Money Guardian team can help you, contact a member of our team at [email protected].

Melanie Eastwood is Director and Mortgage Adviser at The Money Guardian, founding the company in 2017 after a long and successful career in Financial Services. She is passionate about helping people achieving their goals when it comes to owning property or other financial aspirations. An activist at heart, Melanie tries to make a difference in her community where time allows and, in the past, has served as a local councillor, campaigning against cuts to the NHS and defending local green spaces, she has previously been a foster carer and is also the driving force behind an initiative working with local charities and school children planting trees in their town. The Money Guardian won the NatWest Hero Award in 2021 for its service to customers and the community and has featured in The Times as Vouched For Top Rated Mortgage Advisers for 3 consecutive years.