As well as facing the increasing difficulty to get a mortgage, first-time buyers today are at risk of unexpected costs when purchasing a new home. Controversial deals on the housing market which are sparking fears of a return to easy credit are adding to this nightmare, but buying your first home needn’t be such a minefield.
Here are some tips to help you successfully navigate the property market as first-time buyers:
Ex-local authority housing or flats
Ex-local authority accommodation provide more space for your money and will be a lot cheaper than privately built accommodation. Getting a mortgage however might be difficult, as some lenders will avoid high-rise schemes or developments with low owner-occupancy. Also be warned of maintenance costs, and some neighbourhoods may not be to everyone’s liking.
While everyone likes new things, new-build homes are expensive and mortgage offers tend to only be valid for six months. So if the property takes longer to build, you could lose your offer. New-builds however are cheaper to heat and maintain, and buyers can take advantage of phase one of the government’s Help to Buy scheme which allows you to take a mortgage for 75% of the cost of a new build property, provided a 5% deposit is paid. The government will provide a loan for the left-over 20%.
You are sure to find an old building that has been converted into flats in most cities, and these are full of character and little quirks. However they can be costly to heat and might not come with parking facilities. A survey will be vital for highlighting any structural problems.
Freehold or leasehold?
If you buy a flat it will either be leasehold or a freehold property. Leasehold flats have a separate freeholder who will levy a service charge, via an agent, for the property’s upkeep. This can be a complex venture as extortionate service charges and bad service from managing agents are common complaints among leaseholders.
By owning a share in a freehold, you have more say in how the building is run and what work is done. The downside is that you may have to liaise with neighbours to get simple jobs done. Both contracts have set rules that you must abide by as homeowners – such as whether or not you can have a pet and what changes can be to your flat.