Wanting to buy - Absolute NOVICE

bp5678

I'm a 23 year old wanting to buy a property in the future. I'm still saving but I feel I should start educating myself about the buying process because right now I literally know NOTHING. When I say I literally know nothing, I've only recently learn how a mortgage works and how credit ratings work.

My best friend who is 24 is a quantity surveyor so it is all he ever talks about and to me it's all jargon. He's bought a property which he is buy to letting and he's going to buy another soon and do it up then sell it on.

I guess there's an element of competition that he is doing much better than me in terms of progressing in life with money etc so I'd like to try and play catch up.

I've just set up a help to buy isa where I put £200 in each month (the maximum) and i also have a LISA and I'll move all of this money across into my LISA when I come to buying a place.

What else should I be doing or where should I go to learn more?

Thanks in advance.

ReadingTim

Most banks and mortgage providers do guides for first time buyers - here's HSBC's. MSE do one too - see if you can find that.

In the meantime, keep saving - you can never had a big enough deposit...

Gwendo40

An ability and desire to accumulate debt, no matter how serviceable it is, isn't necessarily an indicator of your friend ''doing better in life'' than you.

(Or at least at one time it wasn't seen as such)

Smodlet

And don't believe a word that comes out of any Estate Agent's (EA's) mouth. Ever. Lawyers are almost as bad but not allowed to lie quite so much, assuming you catch them out.

ReadingTim

Gwendo40 wrote: »

An ability and desire to accumulate debt, no matter how serviceable it is, isn't necessarily an indicator of your friend ''doing better in life'' than you.

(Or at least at one time it wasn't seen as such)

Whereas owning your own home is increasingly a very stark indicator of who's doing well in life vs those who aren't. And I don't think resentment towards landlords/landowners is exactly new either...

steampowered

Have a look at https://www.moneysavingexpert.com/mortgages/how-much-can-i-borrow

The most important thing is to be realistic about what you need to save as a deposit.

The average first-time-buyer deposit last year was £33,000. If you are only saving £200 a month it would take you 14 years to save that.

The first thing to do is to look on zoopla at the sort of property you might be interested in buying, work out the maximum mortgage you could get, and then work out what deposit you'd need to buy that sort of property ... get an idea of budget.

GoingOn30

Focus on getting your monthly outgoings as low as possible. If you can live for free/very cheap with family then do that, if not then house share.
Don't buy a new car, but used or better get public transport/cycle.
Cut down on eating out, learn to cook in batches and store meals in the freezer.
Don't upgrade your phone when your contract runs out, ask to keep your handset and cut the tariff.
Weed through all your direct debits and stop any you don't really need.
If you work <40-45 hrs a week then try and find a second job to top up your earnings.
Saving for the deposit is the biggest hurdle and as others have mentioned could take several years so not too much point learning all the technicalities until you are nearly ready with your savings.

diggingdude

bp5678 wrote: »

I'm a 23 year old wanting to buy a property in the future. I'm still saving but I feel I should start educating myself about the buying process because right now I literally know NOTHING. When I say I literally know nothing, I've only recently learn how a mortgage works and how credit ratings work.

My best friend who is 24 is a quantity surveyor so it is all he ever talks about and to me it's all jargon. He's bought a property which he is buy to letting and he's going to buy another soon and do it up then sell it on.

I guess there's an element of competition that he is doing much better than me in terms of progressing in life with money etc so I'd like to try and play catch up.

I've just set up a help to buy isa where I put £200 in each month (the maximum) and i also have a LISA and I'll move all of this money across into my LISA when I come to buying a place.

What else should I be doing or where should I go to learn more?

Thanks in advance.

Be aware you can't just transfer a big pot of money. Maximum you can put in is £4000 a year. Sure you know that but have seen some on the savings board not realise.

Im in the same boat as you and wish you well

muz3562

accumulate more in savings than just the deposit you are going to need . You will need to pay conveyancing fees , survey fees , mortgage arrangement fees and a few other legal costs up front .



Plus you are going to still want to have some reserve in savings in case some unforeseen problem comes up . I had a friend get into difficulties right at the start of his mortgage because there was a delay in exchange caused by the vendors solicitor . He ended up having to rent his old house for 2 more months (£1100) something he had not accounted for .


Also start getting and paying attention to your credit rating . You can get free access to your experian score through MSE credit club .



if you dont have much of a credit history then start to build one up . take out credit cards and purchase on them but then pay back in full . This will give you a favourable history .



steer clear of payday lenders .Any hint of use of payday lenders will kill any mortgage application . Also make sure you keep address details up to date with any financial products that are reported on your credit record and ensure you are registered to vote . Address discrepancies in your credit report can cause issues . And being registered to vote adds additional verification to the address details on the credit report .



Once you have the deposit ready and feel that your credit record is in a fit state to be able to apply for a mortgage then its time to start looking for houses .



If you want to be able to make credible offers soon after viewing properties then it might be best to get an agreement in principle (AIP) before you go out viewing . This will last for a set amount of time and will basically be an indication that the mortgage provider who has issued it is prepared to lend you up to the amount indicated in the agreement . It is not an absolute guarantee that you will get a mortgage but it is a good indication based on usually a soft search of your credit record and verification of financial and ID details provided to them . You can arrange an agreement in principle either with a lender directly or through a broker .



once you have the aip and start viewing properties you can start making offers on properties . Some agents and vendors might consider and accept offers from someone without an AIP . But if you then find out that you cannot get a mortgage you will have got your hopes up for nothing and will waste agents and vendors time . If you are buying only in a small area then the local agents may well remember you and view you less favourably in future even if you do have an AIP .


Once you have had an offer accepted then it is time to go about the actual legal process of buying the property. You will need to instruct a conveyancer to act on your behalf , it is also best practice to instruct a surveyor to carry out a survey to highlight any problems and repairs that might be required , there are different levels of surveys available at varying cost . You will also then need to make the full mortgage application either directly to the lender or through your broker if you used one for an AIP .The mortgage provider will then carry out a valuation to verify that they are not lending more than the value of the property . Once your mortgage application has been approved the solicitor will carry out local searches to check if there are any local issues that might effect your decision to purchase . Then one of the later steps in the process is for your conveyancer to liaise with the sellers conveyancer to exchange contracts of sale and agree a completion date (the date you can actually move in ) Once the exchange of contracts has taken place neither vendor or buyer can back out of the sale without having to compensate the other side for their losses . It is at exchange that the purchase becomes legally binding .

Gwendo40

ReadingTim wrote: »

Whereas owning your own home is increasingly a very stark indicator of who's doing well in life vs those who aren't..

Agreed...it's such a sad situation isn't it.