Buying your first property is one of the biggest purchases you will ever make and amounts for the largest debt you are likely to take on in your lifetime. The knowledge of this, alongside the fact that you need to raise a large deposit, touch up your credit report, and find the right place can make this a really stressful and anxiety-driven time for you. Now, here you are, reading an article called ‘The top 6 first time buyer pitfalls’ and your stress levels are probably through the roof. The good news is, we’re highlighting the pitfalls so you don’t fall into them.
First time buyer pitfalls in brief:
Make sure the property you’re buying has standard construction and doesn’t have anything unusual about it.
Choose a survey based on the condition of the property, not on the cost of the survey
Make sure you think about the location of the property – visit it at a few different times of day to get an idea of the noise and visit the local shops and supermarket.
Don’t rush into any decisions – take time to research the area, the mortgage types, and
Don’t choose a building that lenders don’t like
First among first time buyer pitfalls: if there’s anything unusual or non-standard about the property, your lender might not like it. This is usually the case for any building that is built with non-standard materials such as having a thatched roof or a timber frame (anything other than brick and mortar). In some cases, if you’re buying a flat in a high-rise building, a building close to the sea, or a grade 1 listed property, then you might struggle to get the lender to agree to lend to you.
If you’re planning on buying a non-standard constructed house, or any of the others above, then you may need to find a specialist lender. Check with a professional on this.
Get a good survey done on the property you are buying
Here’s one of the first time buyer pitfalls that isn’t immediately obvious: When you buy a house, you typically need to get a survey done on the home you are buying – sometimes this is simply a mortgage valuation survey. This is often for the lender, so they can get a good idea of the condition and value of the property. This survey can also help you get an understanding of the property you’re buying. You can use information found by this report to negotiate a lower offer on the property or to simply have a good idea of the likely costs to make necessary repairs.
While a thorough survey can be relatively pricey, they tend to save you a lot of money further down the line as you could find yourself paying out a lot in repairs. You shouldn’t choose which survey to take based on the cost – of course, you’re aiming to save money, but you should ideally choose which survey to do based on the condition of the property.
RICS Condition Report
The cheapest survey you can get is a simple RICS Condition Report. This simply describes the condition of the property and identifies any risks and potential legal issues. If there are any urgent problems with the property, then this will also be highlighted in this report.
When to use this survey
If you’re buying a new-build property or a conventional property that appears to be in good condition, then this would be suitable for you. and highlights any urgent defects.
This costs around £250.
RICS HomeBuyer Report
This report is a little pricier, but it will help you find out more about the structure of the property, whether or not there’s a chance or evidence of damp or subsidence. This report can identify whether there are any hidden issues, either inside or outside the property.
It’s worth noting that nothing will be looked at underneath the floorboards or behind any walls.
In some cases, the HomeBuyer report includes a valuation of the property. If the property is valued at lower than the asking price, you may be able to use this valuation to revise your offer.
The report also gives you suggestions for any repairs that need to be made to the property. If there are a lot of things that need repairing, you can use this information to drop the price of the house by a certain amount or ask that the repairs are made prior to completion.
When to use this survey
This survey is suitable for standard and conventional properties that are I a good or reasonable condition. It’s a lot more detailed, so it can save you a great deal of money in the long run.
RICS Building Survey
This is very similar to the HomeBuyer Report, but it follows a rating system to help you identify what problems need sorting out more urgently.
This survey is very in-depth, highlighting any issues with the property and giving advice on repairs or maintenance options. You also receive advice sheets which tell you how to deal with some of the problems outlined. You’ll receive a list of options on the repairs you may need to take and information on what will happen if these problems aren’t sorted.
When to use this survey
If you are buying an older property or are planning on making any major changes to the property, then this would be suitable for you.
Location location location
Another of the many first time buyer pitfalls is choosing the wrong location or choosing an expensive location. Finding the perfect house might feel like a colossal task, so it’s easy to disregard the area. You want to check the crime rates of the local area, as this will affect the costs of insurance. You’ll also want to make sure it’s not an area that’s susceptible to flooding.
It’s great to have your dream house, but if the neighbours are noisy or you’re next to a busy road or trainline then you might find yourself wishing you had put a little bit of research into the location of your property.
In terms of cost – if you’re happy to be flexible with some key factors then you could easily find a property that suits you in a cheaper location. If you choose a nice part of a cheaper area then the value of your property is more likely to rise over time, so it works out as a great investment choice.
If you’re planning on buying in London, then you can check out our list of the cheaper areas to buy your first home here.
Don’t rush into buying your property
It’s an exciting time for you, that part’s obvious, but first-time buyers often find themselves rushing into decisions, either because they’re conscious that great properties get snapped up too quickly, or simply that they believe they’ve found the perfect property straight away. This makes for one of many easy first-time buyer pitfalls. Try not to run wild, as you could find yourself later wishing you had a better look. You also want to make sure you take the time to iron out any problems on your credit report and potentially build up your creditworthiness – if you don’t leave yourself enough time to do this then you could be offered a much higher rate. This is also the case for choosing your mortgage provider – do your research, don’t just go with the first one that you find.
Try not to choose a property because you can’t find the one you like and believe that it, therefore, does not exist. You may need to wait a little to see what comes on the market.
Take your time when choosing your property
Allow yourself some time to research everything thoroughly – the local area, the crime rates, the local school catchment areas, the nearby shopping centres and supermarkets, and everything you can about the house you are planning on buying. Make sure you know how long your commute to work will be, and how much it will cost.
Furthermore, try not to get too emotionally invested in a property before a survey has been done. If problems arise that could be costly and you’re not able to get a reduction on your offer, then you may need to walk away and find another. It’s easy to let your emotions have control here, but this can lead to costly repairs.
Make sure you prepare your credit report
Yet another of the first-time buyer pitfalls to consider: Your credit report is easily one of the most important parts of taking out a mortgage – it could even be the make or break for you, so you want to make sure it’s well polished. It’s a complete myth that checking your report has an impact on your credit score (not to mention that your credit score isn’t used by lenders anyway!)
Here are some key tips to help you keep your creditworthiness in good shape and make you are more attractive applicant:
Use your available credit sparingly
Try to only use your available credit sparingly (and in the case of your overdraft, not at all). Aim to only use up to 10% of your credit limit on your credit card to help build up your creditworthiness.
Don’t exceed your credit limits
Exceeding your credit limit suggests that you are struggling to manage your finances, so if this is the case – it’s likely that you can’t afford the extra payments that will come with the mortgage.
Don’t miss payments
Missed payments on your credit report don’t look good to lenders, especially when applying for a mortgage. Lenders want to know that they’ll be paid back on time. If your credit report doesn’t prove that you do, then you’re less likely to be accepted.
Get errors corrected and removed
If there are errors on your credit report, don’t just brush them off. Make sure you get them corrected and removed.
Register to vote
Registering to vote is one of the easiest things you can do to improve your creditworthiness so if you move to a new house, make sure you register right away to make sure you keep up a longstanding history of being registered.
Don’t make too many applications
Hard searches on your credit report can have small negative impacts on your creditworthiness, even if you are accepted. This is because you could look like you’re desperate for credit.
Joint applications use both of your reports
Be aware that if you’re applying for a mortgage with another person, then both of your credit reports will be checked. Sit down together and go through your credit reports to make sure you’re both creditworthy.
You can sign up for Credibble.com for free and view your personalised booster tips – it doesn’t have any impact on your creditworthiness!
Set aside more money than just your deposit for your property
Often, first-time buyers will stop saving as soon as they have the deposit they need. Don’t do this. Research how much more you will need to pay for all of the extra costs that come with buying a new home. Here’s a list of all the things you can expect to spend money on.
- Mortgage arrangement fee- this is the fee that you will have to pay to the lender to arrange your mortgage for you.
- Stamp duty – this is also known as land tax – the amount you pay depends on the value of the property. You can find online stamp duty calculators which will help you work out how much stamp duty you will pay.
- Legal fees – always get a quote prior to starting any work with a solicitor. You’ll want to hire one for your contracts, land registry, stamp duty, and the transfer of funds.
- Survey and valuation fees – as mentioned previously, you may need to pay survey and valuation fees.
- Land Registry – this is a fee to be registered with the Government’s Land Registry department.
- Furniture, maintenance, renovations, and decorating costs – you don’t want to buy a home, move in, and realise that you have no furniture and no money to buy any.
- Removal services – the cost of this will depend on whether you decide to hire a company or simply hire a van. Find out ahead of time how much it will cost you.
Credibble offers two fabulous solutions
If you’re preparing to take a mortgage, never apply until you’ve tried our unique and FREE Credibble Home app. Our smart technology will tell you what you need to fix so you avoid rejection. The app predicts when you will be able to buy, for how much and tracks your month-by-month progress to mortgage success. We’ve even added your own mortgage broker, so you get the best deals available.
More focused on your credit rating? Well, get started for free with Credibble’s 24- Factor Credit Check to truly help you improve your creditworthiness and how lenders view you. (Remember: lenders don’t use your credit score! We’ll show you what lenders look for and how to get your credit report in the best shape possible).
Last updated by Oliver Macmillan, May 2022