This is the first of a series of short articles I want to share with you about the home buying process.
Below I have listed the first five critical steps.
#1 Decide if you Want to Buy a Home
Step #1 is to decide if you want to buy a home. While many people say they want to buy a home, it may not always be the right decision. While I am definitely an advocate for home ownership, I also know it’s really important to live in a space and community you love so if that means that renting makes more sense, then that’s okay too.
#2 Decide What Amenities/Features you Want in your new home
Step #2 if say you’ve just got married, it may make sense to rent together first so that you can decide what are the important features you need in the home you purchase. Perhaps it’s storage, or maybe you thought you could live in a 1 bedroom flat but after a few months it becomes clear that you need 2, or even 3 bedrooms. If you have pets, this will be a key consideration and will impact the type of home you can actually buy.
#3 Decide on a Budget
Step #3 I often get buying enquiries from people who think they are ready to buy, and if they haven’t done so already, I advise them to figure out their budget and speak to a mortgage advisor. Doing this will give a really clear picture of how much down payment or deposit you will need to have, what the loan terms may be as they will impact the monthly mortgage payments, as well as repayment or refinancing options down the road.
If you already own a home this information may determine whether you need to sell it first. That’s super important because you might find that you are able to keep your existing home to use as a BTL (buy to let) investment and earn a passive income whilst retaining an appreciating asset.
Part of determining a budget is not just the cost of the property, but also other major components such as stamp duty, closing costs and then the cost of ownership including potential service charges, ground rent, council tax, utilities, etc. Stamp duty is tiered and can add up to 15% to the purchase amount. If you want to know more about stamp duty, then check out my video on stamp duty here. The worst mistake you can make is to have a budget that covers buying the property but with nothing set aside to afford the running costs including routine maintenance.
~Novel Serialisation: Heavens Fire~
#4 Speak to a Mortgage Advisor in Addition to Your Bank
Step #4 While your bank may be willing to offer you a mortgage, it’s still beneficial to speak to a mortgage advisor who can look at the “whole of market” to find other financial institutions that are willing to lend. Their rates and terms may be more favourable than those offered by your bank.
#5 Get a Mortgage in Principle
Step #5 When you’ve determined that budget and have had conversations with mortgage advisors and lenders, you want to make sure you get a Mortgage in Principle. This is hugely helpful when you go out looking as it demonstrates that you truly have got a sense of what you can afford and many estate agents will ask you that as a way to gauge how serious you are as a buyer. You may also be required to demonstrate proof of funds for your equity portion when you are submitting an offer or when an offer is being considered.
Ugo Arinzeh is the founder and Managing Director of Onyx Property Consultants. She has an MBA in finance and spent over 10 years with Bank of America Merrill Lynch structuring and negotiating real estate transactions. Over the years she has personally bought, sold and managed properties both in the US and London. Ugo is passionate about property and founded Onyx to utilise all her skills from her corporate and investor background to deliver exceptional results for her clients. As part of Keller Williams, Onyx is connected to the largest network of agents globally.
