Figures recently released by Nationwide show that house prices rose in the months of June and July. This follows three months (March, April and May) of falling house prices, showing that the housing market remains unstable. It may not be good news for home owners that are looking to sell. But it can be great news for first time buyers, who can use this market instability to their advantage.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Know what you can afford
There may be a particular location you would like to buy in, but first things first, have you checked that you can afford to live there?
As well as considering house prices, you should also take into consideration which Council Tax band the property falls into, as well as how easy is it to commute to your work and what the related cost will be.
It is a good idea to meet with a mortgage adviser to talk through your options before you start your property search, so you have a clear idea of what you can afford.
Get your mortgage agreed “in principle”
A mortgage adviser can also organise what is known as a Mortgage Agreement in Principle, which stands you in good stead when negotiating the price of your first home.
Sellers that can see you have met affordability tests and that your finances are in order, are more likely to continue discussions with you knowing they will get a prompt transaction.
Don’t panic buy
The news that house prices are rising could lead some first-time buyers to panic and buy a property on the assumption that prices may continue to rise and they miss their window of opportunity to get onto the housing ladder.
First, it is important to note that even though month-on-month house prices did increase in June and July, it was only by a small rise of 0.3% (July). It is also important to consider that the annualised growth figure dropped from 3.1% to 2.9% in July.
When looking for your first property it is important to take your time and thoroughly research the market so that you don’t succumb to the pressure from estate agents to rush into a purchase.
Play the ‘no-chain’ card
First time buyers are a home-owners’ dream because they come with no upper chain.
On average three out of ten property sales fall through each year. Most of these sales collapse because a hold up in the sale of one property causes the other sales to fall through.
Sellers are more likely to choose bids from buyers who are not in a chain. As a buyer, don’t be afraid to use this favourable position to your advantage.
You may think it is ‘cheeky’ to put an offer in that is lower than the asking price. But, the seller may accept it on the basis that you are not in a chain and you can move quickly ahead with the purchase. It can often be a win:win solution.
Do your own research
It’s very important that as a buyer you carry out an independent survey of the property. The basic survey is a Condition Report and the most detailed is a Building Survey. The cost of surveys ranges from £300 up to £2,000.
Shockingly, only 20% of buyers get a professional survey carried out before purchasing a property.
Depending on the type of survey you decide to go for, it could highlight any structural damage to the property and it will also give the current market value of the property. This value can be (sometimes significantly) different to the value placed on the property by the estate agent.
If this happens, you as a buyer can use it to try and negotiate a discount.
Need a mortgage?
If you are planning to buy your first home, ensure you have the best mortgage arrangement to make it affordable. Get it agreed before you negotiate the proc.
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