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:
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:
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?
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:
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.