Buying to renovate? Here are our top tips for first time buyers

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With property prices at an all-time high, a reduction in mortgages available and a lack of supply of homes for sale, first time buyers may struggle to be able to afford to get on the property ladder in London. However there are still various opportunities out there and several ways to make purchasing your first home more affordable:

– Search further afield. 

Look for any properties around and on the fringes of future Crossrail stations or stations on the future Bakerloo extension further out from the city centre. There may be a long commute now, but with lower prices in comparison with other areas, they are a great investment for the future, with property prices set to rise once transport links open. If you are a keen cyclist or have your own mode of transport, you can search for properties in areas that are further from transport links that are always less desirable but more affordable.

– Ask if you can purchase your rental property.

If you are renting, consider asking your landlord if they are interested in selling their property directly to you, cutting out the fees they would have to pay estate agents, therefore being able to give you a reduced rate.

– Consider properties that are unfinished, have odd layouts & locations or that require renovation. 

Try properties that have an odd layout that you can potentially work with or look for properties above shops. If you are good at DIY and have some cash savings, try reducing your property purchase price by looking at shops that you can convert into homes. You can always get discounts by buying off plan, but we aware of the risks involved in doing so and make sure a solicitor checks that all contracts signed are watertight.

– Search for council estate properties.

Search for council estate properties for sale, where you may find lower property prices. They tend to have spacious rooms and good layouts due to being newer builds. Don’t forget that if you are a council tenant with at least five years tenancy you might be eligible to buy your home at a significant discount. Some housing association tenants may also be eligible.

– Use all financial resources available to you.

Don’t shy away from using the financial resources available to you. There is plenty of information out there that can guide you through the process. The government’s help to buy scheme which comes in two forms: an equity loan and a mortgage guarantee scheme, is a great way to purchase a home where you only need a 5% cash deposit. With an equity loan you secure a 75% mortgage and the government lends you up to 20% of the cost of your new build home. The mortgage guarantee scheme is different, it works in the same way as a standard mortgage, but the government offers lenders the option to purchase a guarantee on mortgage loans.

– Look at shared ownership & New Buy schemes.

Shared ownership schemes (party buy and part rent) are provided through housing associations and may be another effective financial solution. You buy a share of your home (between 25% and 75% of the home’s value) and pay rent on the remaining share. You can buy bigger shares at a later stage when you can afford to.

Another scheme is NewBuy, this allows you to buy a new-build home with a deposit of only 5%. If has to be owned fully by you (so you can’t use any of the above schemes) and it has to be built by a builder tacking part in the scheme.

– Use a financial advisor or broker & search the internet for mortgage deals.

Use a financial advisor or a broker to get the best mortgage deals on the market, but be aware of their charging policies before you sign any contracts. If you are having difficulty in securing a mortgage, check with other banks or brokers, search the internet for mortgage deals and ask building societies for what they can offer.

– Be aware of additional costs before and after purchase.

Although you may be able to raise the required deposit, don’t forget that you will still need to pay stamp duty if your purchase price is over £125,000. Be aware of this when placing an offer on the property you want to purchase and make sure to include it in your initial budget.

Consider additional after sale costs such as yearly service charge, ground rent and buildings insurance, if you are purchasing a leasehold property. These can be substantial if your property has an elevator. Check with the freeholder (via your property solicitor) if any building repair work is going to be carried within the next 5 years and try to negotiate with the vendor to pay for all or a portion of this.

– Be a more attractive buyer to the seller, by stating you are ready to move quickly.

State to vendors that you are a first time buyer and are ready to move. You will be a more attractive buyer to them, they don’t have to wait for you to sell another property to exchange contracts with you. If you are looking to move quickly, make sure the vendor has found another property, ask if there is a chain, and how long you would need to wait.

– Don’t rely on the bank’s or building society’s basic property survey.

Hire a surveyor to check the building is structurally sound or request if your lender can provide a more comprehensive survey for a smaller additional cost. If any problems come up in the survey, ask for a builder to give you a quote on the cost of the repairs and ask the vendor for a reduction in the sale price.

Make sure all appliances and lights are working and request the warranties for all, including for the boiler. The vendor may not have them, but it is worth requesting them before exchange. Don’t forget to get gas and electric certificates for the property as well as boiler maintenance certificates.

On the local council’s planning website, check if planning permission has been requested or has been given for any major construction around your property. You don’t want to move in and find that a large tower block will be built next door obstructing your view and causing building work noise for several years.

– Find out everything you can about a property before purchase.

Always view the property twice and try being in every room alone to get an awareness of the space. Taking photographs to review the next day will always give you that extra time to consider if this is the property for you. Check on websites like Zoopla what prices similar properties have sold for in the area do you don’t overpay.

– Rent a room after purchase to help pay for costs.

After purchasing your property consider renting a room to help pay for the mortgage and any costs. Try weekly rentals using the websites like Airbnb that have lower fees than estate agents but give you a much higher rental income.

The most important thing to remember, is to view as many properties as you can and to not give up even if you run into problems at any stage during the purchase process.

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