12:52 20 February 2013
Two sets of positive industry figures over the past week and a flurry of cheap mortgage deals suggest the outlook is improving.
The latest housing market survey from the Royal Institution of Chartered Surveyors (RICS) reported that house prices rose in January for the fourth consecutive month. At the same time, data from the Council of Mortgage Lenders (CML) shows that the number of first-time buyers has reached its highest numbers in five years.
A total of 216,000 first-time buyers became homeowners in 2012, making it the first time the annual total has exceeded 200,000 since the 'pre-crunch' days of 2007.
But while all of this is great news, buying a home - whether for the first time or not - is no picnic, so here are our top 10 tips to help you on your way...
1. Save as much as you possibly can
Thanks to the government's Funding for Lending Scheme, which provides cheap funds for banks to lend with, mortgage rates are falling rapidly. And while the best deals are still reserved for those with a large deposit, things are also looking up for those with smaller sums to put down.
Recent Bank of England figures for example, show that the average two-year fixed rate on mortgages of 90% of the property value fell in price from 5.33% to 4.73%, between December and January.
If you have a deposit of 10%, you can now get a two-year fixed rate mortgage at 3.69% with Chelsea Building Society, which comes with a fee of £1,695.
That said, those with a 40% deposit can enjoy rates as low as 1.89% for two years with Chelsea (£1,695 fee) or 1.94% for two years with Yorkshire Building Society (£1,495 fee).
If you'd prefer to fix for five years and have a deposit of at least 35%, First Direct's five-year deal has a rate of 2.69% with a £1,999 fee. You can read more here.
Those who fancy fixing for even longer can take advantage of Norwich & Peterborough Building Society's new 10-year fix at 3.99%. You'll need a 25% deposit but the fee is very low at £295. You can read more here.
Visit our mortgage channel to browse through even more deals.
2. Speak to a mortgage broker
If you're feeling a little baffled by the number of mortgage deals on offer, it's well worth talking to a fee-free mortgage broker who will be able to guide you in the right direction. You can contact our mortgage partner, London and Country, for free, independent advice on 0844 209 8725.
3. Factor in the fees
Rates are falling but attached mortgage fees are largely on the way up, so don't forget to factor these in when comparing costs. It can sometimes work out cheaper to go for a higher mortgage rate if it has a lower fee. Try to avoid adding the fee to the mortgage itself as you'll pay interest on it.
On top of this, you'll need to budget for solicitor fees, valuation fees, surveys, removal costs and stamp duty.
Stamp duty is paid on properties worth more than £125,000. On homes worth between £125,001 and £250,000 you'll pay 1%; on properties worth between £250,001 and £500,000 you'll pay 3% and on homes worth £500,001 and £1million you will pay 4%. Anything over the million mark attracts stamp duty of between 5% and 15%.
Be wary of buying a property that's priced just below one of these stamp duty levels if you're planning to sell up again in a few years. Unless house prices rise significantly in your area, you may find it difficult to sell your home for more than you bought it for as no one will want to pay the next level of stamp duty.
4. Get a mortgage agreement in principle
Once you have found a mortgage deal you like, you need to get an agreement in principle from the lender. This will give you an indication of how much money you will be able to borrow - and once you have this in place, it will prove to sellers and estate agents that you're serious about buying.
Avoid getting too many as the lender will carry out a credit check on you which will leave a footprint on your credit file. And remember this is only an agreement in 'principle' - if your circumstances change (or even if they don't) the lender can change its mind.
5. Get a good solicitor
Getting a good solicitor will help to ensure the buying process goes as smoothly and quickly as possible. Ask friends and family members for any recommendations or use the Law Society to search for a reputable firm.
Get at least three quotes to compare prices but remember that cheap doesn't always mean best.
6. Research the area
Before you decide on a property, research the area. What are the amenities like? Does it have good transport links? Are there good schools nearby? What are crime levels like? All this information is now freely available online.
Also try to find out whether there are plans to build in your area. After all, you don't want to buy a house, only to discover a block of flats will soon obscure the view from your garden.
Check out the government's planning portal which highlights planning applications made in the area.
7. Don't rush your search
View properties carefully, checking for signs of damp, cracks and bad plumbing. If you are drawn to a particular property, go back to view it at a different time of day. The neighbourhood in the evening could look entirely different to how it appeared at midday.
Don't be afraid to ask the estate agent (or seller if they are at the viewing) any questions you have - and even knock on the doors of surrounding homes to see what it's really like to live in the street.
8. Go in below the asking price - but don't go too low
If you have found the property of your dreams, don't feel you have to go in at the asking price. But if you're going to go below it, have a reason or two to justify the decision, such as the need to make big improvements or extend a property lease.
Also take a look at sites such as Zoopla and Rightmove which show the price similar properties sold for in the neighbourhood. If an identical property sold for 10% less last month, you'll have a good reason for going in below the asking price.
If you know the seller is in a hurry to move, they may be more willing to accept a lower price.
9. Beware of 'estate agent talk'
Estate agents can be very good at persuading you to pay the asking price, no matter how much you try to negotiate. It's not uncommon to be told that someone else is very interested in the property and is willing to offer the full asking price that day. And if you don't match this offer, you'll lose the property.
Unless you know you'll never be happy living anywhere else (in which case, it's probably worth going in at the asking price to begin with), stick to your guns when negotiating.
Once your offer has been accepted, get the estate agent to take the property off the market immediately.
10. Choose the right survey
The final step will be to get a survey carried out (bear in mind the results of this could also affect tip number 8).
Your mortgage lender will require you to have at least a basic valuation survey but remember this won't assess the state of the property.
If your property is less than 100 years old and in reasonable condition, it's worth getting a homebuyer's report which will highlight any serious problems. You can often arrange for the surveyor carrying out the valuation survey to do a homebuyer's report at the same time.
But if your property is older than this, consider having a full structural survey which examines the structure in a lot more detail. This option is more expensive.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
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