We've finally done it â€“ we've bought our first home!
At Christmas, my fiancÃ© and I realised we’d saved enough of a deposit to buy our first home. As New Year’s Eve rolled on, one of my resolutions was to make this dream a reality for us in 2014.
It’s been just over six months, but we finally got the keys to our new place last week.
When we first entered our mortgage and home-owning journey, it seemed a minefield until we read MoneySavingExpert.com’s First Time Buyers’ guide from top to bottom.
But now we’ve got some tips of our own to share, and hopefully our experience will give you an insight into buying your own home too.
What was lurking in our credit files?
Checking your credit file is one of the most important things you should do. It’ll give you an idea of exactly how lenders view you and your finances before you make a mortgage application. If you have any arrears, these will show on your file for up to six years.
We signed up to Check My File, Experian and Equifax to see ours.
Annoyingly, while my credit score was good, I had a debt with O2 from four years ago when I had ended my mobile phone contract, cancelling a direct debit before the final payment had been taken.
I contacted O2 to explain the situation and luckily, it agreed to remove this default which also improved my credit score. So now both our credit files were fit for the next stage!
See MSE’s Credit Scores guide for ways to boost your rating and to check yours for free.
We talked it through with a broker
After speaking to MSE Lesley (our in-house broker), she recommended we speak to a broker to discuss our deposit, how much we could realistically borrow and the value of the home we could afford. We had to give details of salaries, any debts and outgoings such as pension or student loans. We also had to give an indication of what kind of mortgage we wanted, such as a fixed, interest-only or tracker loan.
Our broker then talked us through the various lenders and which mortgage would suit our needs. At this point, it was time to get what’s called a "decision in principle" – the bank’s preliminary nod to lend to us.
We had to supply countless bank statements, payslips and proof of identity. Lenders typically want to see three monthsâ€™ worth of statements, but it can be more. I can’t stress the importance of having all your papers in order before doing this and having a proper filing system. A photocopier/scanner were also a must.
But once we had this sorted, it was onto the fun partâ€¦
We became ‘hot buyers’
Once we knew our budget, we visited all the local estate agents to tell them exactly what we were looking for. We were strict on location, the fact that we wanted three bedrooms, didn’t mind taking on a project house and that we wanted a garden with side access.
I kept all their business cards to give them regular calls to see if anything new had come to the market, or if they had anything coming up.
Estate agents also told us they’d add us to their ‘hot buyer’ list, where we could get a heads-up of properties just about to come on the market. (A ‘hot buyer’ is someone in a good position to move quickly, so a sale’s guaranteed within a short space of time.)
And we also created email alerts at Zoopla and Rightmove so we’d find out about their latest houses coming to the market.
At first I’d email to arrange viewings, but it’s best to pick up the phone â€“ the longer we looked, the harder it became to even get a look-in on the open day for viewings.
I’d also recommend keeping a spreadsheet of every property you visit, listing all the pros and cons. This showed us exactly what we wanted in a property and what we wouldn’t compromise on, eg, a small kitchen. We visited more than 60 properties in total and only five stood out for us.
We fell in love… but were then outbid
Within a month, we fell in love with a house. It ticked all our boxes. But just as much as we loved it, everyone else did too.
We submitted our offer and contacted our solicitor. Unfortunately, our offer was declined. Someone had offered Â£7,000 above the asking price.
We then had the same experience with three other properties â€“ cash buyers were offering Â£10,000-Â£20,000 more than the asking price. It was frustrating, but at least we’d made contact with our solicitor and knew exactly who we could contact if we made an offer that was accepted.
Before getting a solicitor, be careful to read the whole contract of employment. It seems tedious, but you need to know exactly what the solicitor’s fees cover and what they don’t cover.
Then we found a repossession property – not for the faint-hearted
We then found a repossession that we loved. It had an attractive price tag because of its status and also had a homely feel. We spent 20 minutes inside, talking about what we’d change if the house was ours. We only stayed five minutes in all the other houses we’d seen – not much when you consider this is one of the largest financial transactions you’ll probably ever make in your life.
But getting involved with a repossession was probably the most stressful thing we’ve ever gone through. There are some important things you should know:
- The offer you make for the property goes on public notice until an exchange of contracts – so anyone can make a higher offer right up until you exchange, often forcing you to match or up your offer.
- There’s usually a cut-off point where the highest offer wins, but we didn’t experience this.
- Any offer you submit above the lender’s valuation, you have to cover – say a house is valued by your lender at Â£250,000 and you offer Â£255,000, you have to find the additional Â£5,000 â€“ the bank won’t add this to your mortgage.
We couldn’t negotiate a lower price as you can with a normal house sale.
- Most are ‘sold as seen’. So anything that’s in the house stays as it is. So we ended up with furniture, garden junk and personal possessions.
It’s also important you do thorough checks on the property, as you can’t simply go and ask the previous owner as with a normal sale. We downloaded crime stats and its energy performance certificate. We also knocked on neighbours’ doors to find out about the area and the previous owner.
We also checked the Environment Agency website to see if it was on a flood plain and the local council website to see planning applications.
Often with repossession properties, the gas, electric and water are disconnected as the previous owner may have struggled to pay the bills. So we found out who supplied what and how to get it reconnected.
A Â£450 survey saved us from a Â£40,000 bill
Once you’ve made an offer, and it’s accepted, you should get a survey carried out. This was a saving grace for us with one house we very nearly bought.
We booked a homebuyers’ survey that rates different aspects of your home on a scale of one to three. It came back as nearly all threes, indicating Â£40,000 of urgent work, including replacement windows, new roof and heavy damp penetration to the brickwork.
We paid around Â£450 for the valuation and survey, but we had to swallow our pride and walk away at that stage.
Finally… we bought our house
In the end, we bought the repossessed house. It needs a lot of work to get it habitable, but it’s got everything we need and want. We’re now going to spend every moment we can doing it up.
It’s been a six-month journey, with ups and downs and finally a high. We got the keys last Friday and we couldn’t contain our excitement.
Even sitting on garden chairs in the front room, we didn’t care. The house is ours and we no longer have to service someone else’s mortgage through paying rent.
Have you recently bought your own home? Do you have any tips you could share? Please let us know your opinions in the discussion below or in the forum.