I recently went through my first property purchase and would like to share my experience and a few tips to help other first-time buyers who will undoubtedly come across very similar situations. The aim of this article is to help others avoid the costly mistakes I made.
Property Information Overload
I was slightly overwhelmed by the huge amount of information that I received, with 10’s of reports and surveys coming through from our solicitor. Don’t let yourself get overwhelmed and make sure you take the time to thoroughly read every document. I fell for a perceived time-pressure which did not exist as nearly as much as I felt it to.
Tip: Take your time to thoroughly read all material you receive and question everything you do not understand
Do not take the vendor’s word for it
Two of the forms I received were completed by the vendor and subsequently sent via the vendor’s solicitor onto my solicitor and then to me. Even though I raised the question of whether the vendor has to legally respond truthfully on these forms with my solicitor, the fact of the matter is that there is often little that can be done once the sale of the property is completed if the vendor has bent the truth somewhat. Of course you could pursue the vendor for compensation etc. but there aren’t many first-time buyers that have spare funds to do this and there is no guarantee you will get anywhere in court. In terms of the information you receive from the vendor, go through it with a fine tooth comb and question absolutely everything that gives you even the slightest concern. In my situation I have paid the price from not investigating enough. For example, my vendor stipulated that we could gain access to our flat via a private rear passageway as long as we ask permission from the owner, which has always been granted. However from the moment we moved in it became apparent that we were not getting access to our garden from the private passageway and instead all of our building materials had to come through the house from the main road at the front which had no parking. What I should have done after reading the vendor’s comment is to make contact with the passageway owner and confirm this was in fact true.
Tip: Do not believe what the vendor puts down on the forms.
Choosing a first-time buyer mortgage broker
Choosing a mortgage broker is a minefield where I found huge variances in fees between brokers recommended by the estate agents and searching online. The truth is that you do not need to pay a mortgage broker a fee when you compare mortgages with Quote Goat or by going with a company like Habito for example, who do not charge a fee to the buyer. Their fee is covered by the mortgage provider, unlike many of the mortgage brokers out there who charge a fee to the buyer and also receive a fee from the lender.
Compare first time buyer mortgages, with no fee.
Tip: Do not pay over the odds for a mortgage broker, choose a free one instead.
Early Repayment Charge (ERC) advice for first time buyer
An ERC is a sum of money that the lender will charge you should you need to end your mortgage before the initial period. At the time of buying my first property I planned to keep it for the foreseeable future and did not think in my wildest dreams that the ERC would become an issue. However you never know what will happen in terms of your personal circumstances (good or bad) and you may find yourself needing or wanting to sell your property before your initial period has come to an end. For me this mistake ended up costing £11,000. Putting this into perspective, the lender only stood to make £4,000 out of me if I had kept the property for the whole initial period, effectively wasting a cool £7,000.
What I was not told is that there are mortgages out there without early repayment charges as well as other mortgages that have significantly cheaper early repayment charges than the mortgage I went for. On the mortgage brokers computer screen the lender I went for was at the top of the pile as it was £10-£150 per month cheaper than other lenders. However that £10-£150 per month is looking like a much better deal in hindsight!
Tip: Do not assume you will keep your property for as long as initially planned, look at mortgages without the ERCs too as it has the ability to significantly increase costs and even eat into your capital.
I have left this tip until last as it only applies for buyers looking at a leasehold or share of freehold property. When I purchased my property the vendor offered to pay for the lease extension but we would complete prior to the extension being done and I would handle the extension, all on the basis that the sale could go through quicker. However, what actually happened was that the vendor only paid half of the amount required for the lease extension and it took over 1 year to actually complete. I would never again take on responsibility for extending a lease and instead would insist that the responsibility lands on the vendor prior to the sale.
Tip: If possible, do not take on responsibility for things that should really be done prior to you purchasing the property, even if it means a slight delay in purchasing your first home.
I sincerely hope that this summary of my first property buying experience can help others avoid the pitfalls that affected me and if you have any questions please do not hesitate to get in touch.