Hi everyone, Ugo Arinzeh with Onyx Property Consultants powered by Keller Williams. In today’s video we are going to be talking to first-time buyers and trying to share some tips and advice on how they might understand the process when they start going out to look for a property. The first thing I would say is, a lot of agents don’t actually like to work with first-time buyers and the reason is oftentimes they don’t really know what they’re doing and if you’re an agent you’re trying to get your property sold you don’t want to perhaps waste a lot of time with the first time buyer putting in an offer but they’re not really clear on the process. I want to share with you a couple of things you can do to put yourself in the best situation when you do actually find the property that’s right for you.
The first thing I would say is definitely do your homework and speak to several mortgage advisers as well as perhaps your bank if you do bank with a particular bank. The reason is, you want to get what’s called “the mortgage in principal” and that is basically: a bank has assessed your situation and given you kind of the parameters in which they would lend to you, that will give you a sense of budget, how much down payment you’re going to have to come up with, what those loan terms might look like. We are in a historically low interest rate environment so this is a great time to be looking at your interest options.
The other thing to think about is how long do you want that variable rate to be, again it’s a very low interest rate environment, you might want to have your variable rate going out longer to lock in the great rates that are in place right now but definitely it’s important to know what you can afford because that’s going to dictate budget, and even if you can’t afford that property right now, I encourage you to start saving systematically and regularly putting money aside, because it will grow in time and even if you’re five years out from your buying goals, start saving right now.
So, once you have that sense of what your budget is, then you have to consider what type of property do you want and where will that budget take you if, say, you’re renting right now with a couple of friends and you’re in zone one or two, perhaps your budget might take you out to zone three or four and then that’s going to also have a additional changes in perhaps your train fare, your oyster card, what do the costs of commuting now become? So you want to be really clear on that. Some of the other costs that are out there for homeowners that you really need to be aware of is if you’re buying a leasehold property you’re going to typically be paying service charges and ground rent which is part of the communal space and owning and maintaining that communal space, so you want to know what that is and that will vary significantly depending on what the property is – if it’s a converted terrace versus perhaps a multi-purpose block with lots of units, and that has different amenities, has a lift, has a porter – those types of things will impact the service charges you pay.
The other costs of owning a home are things like TV license, utilities, council tax, that you really make sure you need to make sure that you’ve budgeted for. Another area of the things that people often overlook is the cost to maintaining a home. So, what if you buy a property and then the boiler breaks or perhaps an issue with the piping or electrical? I strongly encourage buyers to make sure that they’re setting aside at least 10 percent of that mortgage to funds of reserve accounts so it’s available for you such that if something’s going wrong you can fix it.
A home is a living breathing thing, you need to look after it and you want to make sure you’re preserving it. If you see a leak issue or you see a small water stain in the ceiling, you want to make sure you address that as quickly as possible because the longer you leave that the more expensive it’s likely to become. There is help out there though for the first-time homebuyers scheme with the government you want to make sure that you know what you might be able to qualify for and get a sense of that so that you’re really just starting to figure out the market and even if it’s not right now you have a sense of how to forward plan for it. I work with buyers of all different budgets, so if you have any questions or want to know more about what that buying process might look like, I’m certainly happy to talk that through with you, connect you, or refer you if you want to speak to some mortgage advisers then I think that’s a great first step. So if you have any questions about buying or selling or renting in London, please get in touch.