8 July 2019

Buying A Property as a Millienial


(Yes, I know I look super goofy in this pic haha!)

Disclaimer: I literally still know nothing about the process of purchasing a property. I don't claim to know everything, and I am just sharing the very small information I actually know. Take of this blog post what you will, but I am not held responsible for anything hahahaha.

Hi! So the past 6 months have been the most challenging thing ever, and during the whole process, I really WISHED there was something for me to read, to just give me a little bit more information on how the whole 'buying a property' thing works! So here's me telling you what I learnt from the process (if anything).

I really don't know where to begin!

I'm going to start by saying, although this process was extremely challenging, it's definitely doable. I think the reason an average person finds the property ladder quite daunting is because it's not widely educated. I wish there are more resources in educating our generation on how property purchasing works!

Finances

I'm gonna start with the finances & keep it simple. You need to bear in mind a few things:
- A deposit
- A mortgage
- Stamp Duty
- The extras

Deposit: The deposit for a property is usually 10% of the price. This is a good place to start, especially when you're searching rightmove.co.uk & looking for your dream house. I spent a lot of time on that site, looking at the prices of properties and what I could actually afford; comparing my savings to an actual property I liked. My first tip will be; don't be disheartened about the property prices. For your first property, you will not be able to get that 5 bedroom detached house by the river you wanted, or that 1 bedroom flat in zone 1 which is SUPER convenient. Get yourself familiar with the prices of somewhere you wouldn't mind living, and set that as your goal! Don't look at the super expensive ones, that you most likely won't be able to purchase, it's better to start somewhere achievable!

Mortgage: now this is where I feel like I could have used the most help. It was a little bit tricky for me as I'm self employed (AKA a nightmare when trying to get a mortgage) BUT there is help out there. Get yourself a mortgage broker. Some charge a fee, and some don't! We chose a no fee mortgage broker, and they made the process run somewhat smooth! The only problem with no fee mortgage brokers is that they do try to pitch you additional things, and kinda try and convince you you NEED to have certain things.
The general rule on how much you can get for a mortgage is your salary x 5. This does vary depending on the bank, but I learnt CURRENTLY, that's the rule. For example, if your salary is £25,000 times by 5 = £125,000! If you are purchasing WITH someone, and both of you have a salary of £25k, that allows you to £250,000 on a mortgage (roughly).
The process of getting a mortgage is easier than I thought it would be. Once they assess your finance, it's all about form filling, and providing documents. They'll provide you with an offer, and then your solicitor takes over - you just have to complete (will explain this word soon) within a certain time frame as the mortgage offer has an expiration date!

Stamp duty - for a first time buyer, a property up to £300,000 has no stamp duty. THIS IS AMAZING. On the remaining value, you pay 5% up to £200,000. Take advantage of this, I am super grateful for this!!!

The extras: find out from your estate agent payments such as the council tax, service charge etc that a property may have. Also find out how much electricity and water bills are roughly to run the property! These are add ons you may have to pay for & don't forget to take this into account, and your estate agent *should* be on hand to help you with this. Also don't forget your legal fees (the solicitor payment) and other things like a 'survey'.

Help to Buy Schemes - if I'm honest, I didn't do much research on this scheme as I didn't opt for this route. I love that the option is there should you need it, BUT do your research on it! All I know is you can use a 5% deposit instead of the 10% required.

Leasehold vs Freehold

Shoutout to my girl Pooja the solicitor who taught me this. From what I remember:
Freehold means you own the property the land is on.
Leasehold means you own some sort of contract the property is on. For example, most flats are leasehold, as you can't solely own the land it's built on, so you own a LEASE. Apparently, as long as there's over 99+ years on this, you are good. IDK DON'T MAKE ME GET INTO THIS SIDE OF THINGS. GOOGLE IT (I tried).

The Estate Agent

Estate Agents will help you find your property. We got in touch with ours online, after searching and narrowing our location down. The properties you're looking at will be registered to an estate agent in that town.
From my experience, Estate Agents are hard work. We didn't really have a good experience with ours, or any we came across, which is a shame! I think their job is super demanding, that they aren't able to hold your hand too much on the whole process. As a first time buyer, a bit more help from the Estate Agents would be greatly appreciated, but don't expect them to help you much! (One day, I might tell you the hassle the estate agent caused us, but right now I'm all about good vibes only x)
What I learnt about the Estate Agents job; they show you a property.. multiple properties.. when you're ready to place an offer, you phone them up with the offer. They tell the seller, the seller then rejects or accepts your offer.
A few bits of paperwork and then the solicitors take over..

Solicitor

I can't stress enough how important it is to GET A GOOD SOLICITOR. Don't use the online companies you come across, and get someone who is close by (should you need to visit in emergencies), and reputable. Again, I LEARNT THIS. I did not do this, BUT I LEARNT IT AND THAT'S ALL THAT MATTERS.

Solicitors/Conveyancers (a fancy word that means someone who will help you purchase your property - I still haven't worked out if these people need a law degree lol) ARE RESPONSIBLE FOR EVERYTHING. They basically have to do everything for ya.

They have to carry out some searches, negotiate with the seller on what stuff will be kept in the property (don't let them take your cooker lads), help with your stamp duty calculation etc etc and etc. You just need to communicate with them on what you want, and leave it to them. They also then have to work out when you will 'exchange' which means exchanging contracts with 'the other side' (a word I found out means the seller). Once you've instructed (chosen) a solicitor, they are your point of call throughout the whole purchase, speak to them about everything, call them anytime you want between Mon-Fri 9-5pm. but they might not wanna pick up lol sorry lol getting personal here.

But also, try get a 'no win no fee' solicitor, where if the deal doesn't go through, you don't have to pay them!

Just get a good solicitor and then maybe there'll be minimal stress lols x

Surveyor
For your mortgage, you have to have at LEAST a basic survey done. This is where the bank goes round to check out the property and do some checks on it.
I think this costs around £50 (I don't remember now) and I'm unsure if it changes depending on the property. Your mortgage provider will set this up!
For peace of mind, independently to the bank survey, you can actually get an even more in depth survey done, to find out what's going on in the property you are purchasing.
There's a few different types along with the basic survey and I think they were a homebuyers survey, and a structural survey.
Homebuyers survey: This is pretty self explanatory, but a homebuyers one is to check all the stuff a homebuyer would want to know i.e. any leaks in the home, how the electrics are etc.
Structural survey: along with everything in the basic and homebuyers survey, the structural survey goes into all the nooks and crannies, finds out the structure of the property and I guess a lot more lol.

These surveys vary in price depending on which company you choose, so do shop around! These are optional, but I recommend them. I feel like it gave me peace of mind making sure the property I am purchasing isn't wack. Also, you get a survey where they value the property, and you can use that to negotiate the price of the property if it comes out less than what you have offered, although the seller and estate agent may hate you.

So you've done everything.. now what?

So you set a date to 'exchange' contracts. This means you are now in a legally binding contract and your deposit has gone through. I don't remember if it goes to the sellers solicitor at this point, but it basically means you got the goods. There is a chance it can STILL fall through, but don't ask me how because I didn't even want to get into that lol. On exchange, you set a day to 'complete'. This means YOU GET THE KEYS IF ALL GOES TO PLAN. The solicitors normally advise 10 days between exchange and completion, but I think you can choose a date that's best mutually agreed for the buyer and seller.

On the day of completion.. you just have to wait. Wait for a call from your solicitor to say that you can go pick the keys up from the estate agent! This should be pretty straight forward, but I think if you're moving it's quite hard to be on a tight schedule and have all your moving vans and furniture waiting around for you haha. You then go get your keys from the estate agent, and there you have it.. a property.

So I'm going to turn this into a Q&A with some questions you all asked me on Instagram (I tried to incorporate most of the questions in the post anyway), of course do let me know if there are any other questions you might have!

How much do you need to save?  It of course.. depends on the property you are purchasing but hopefully the finances section of this blog post gives you an idea!

I am Self Employed - What do you provide for your mortgage? This was extremely difficult for me because I did not have many self employed years under my belt. I have to provide my accounts for my tax year. Get a mortgage broker, who will help you with this!

How long is the process? Every single property purchase is different! I found out some people did everything in a month, and some can take a year. Because you are depending on different people at each step of the process, you really can't put a time to it. BUT, if you want to speed (or slow) things down, communicate that with your solicitor, and be ON TOP OF EVERYTHING. If you want to speed things up from your end, just make sure there's nothing outstanding from your end. If they need a form filled, fill it and return it within an hour etc.

What don't people know that they should/Biggest Misconception about purchasing? I love this question. I think the biggest misconception is that it is impossible to purchase. I said this at the beginning, and even I was very doubtful that I would ever be able to afford to purchase. It's all about doing your research and educating yourself on the process so you know what goals to set yourself!

How did you know it was the right time to buy? I didn't. I don't really get the whole 'is it the right time to buy?' thing, and still don't know much about house prices. For me, it was a goal I set. It was more about finding the right property that was perfect for us at the right time. Basically, it all fit into place.

ISA Bank Scheme? Yep - I used this scheme with my bank for a number of years, it only allows you to add a certain amount a year, but a very good scheme!

How many properties did you view? Enough to know this one was the right one haha

How can you afford to buy so young? For a few years now, I have always prioritised purchasing a house. Because of this I deprioritised a lot of other things people my age usually do. For example, I've not gone on holiday for over 3 years now! I knew that saving money, and missing out on a few things would help me achieve my goals, and although I have missed out on other things I would have quite enjoyed, I'm happy with my life choices this far!

How to Save? I wanna write a full blog post about this, so do let me know if you want that!

I hope that this has helped, even a little bit on how the property purchase works, and like I have said.. I still know absolutely NOTHING LOL. The journey was super stressful, and at times I did lose hope on if it would ever happen! Do let me know if you have any other questions though, either here or on Instagram! & let me know if you have any property/home posts you want me to do!

(If you got this far, good luck with the purchase!)

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