10 things to know before buying a house

Property sales in the UK have hit their highest level in more than three years, according to RICS (Royal Institution of Chartered Surveyors), and sales are expected to continue to rise over the next three months.

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Further evidence that the housing market is getting back on its feet is that house prices are creeping up again – in the three months to May prices were 2.6% higher than a year ago and, according to industry commentators, growth is no longer confined to London and the south east.

But buying a home is no picnic, so before you take your first step onto the property ladder, or move further up it, here are 10 things you should know first.

1. National average house prices mask the true picture

National average house prices might be on the up, but there are thousands of individual micro-markets all over the country, and prices will vary between them significantly. It therefore pays to research the area you are buying in carefully.

The good news is that carrying out this research is now easier than ever. Using websites such as Zoopla and Nethouseprices, you'll be able to drill down to an exact street, find out what the last property sold for and when – and even get an estimated current value for any other property.

2. An offer being accepted is no guarantee

Having your offer accepted is a cause for celebration but the sale can still through fall with no legal consequences. Only once you've exchanged contracts does the transaction become legally binding and at this point neither you, nor the seller, can pull out without paying a hefty penalty – usually the loss of deposit which is held with the seller’s solicitor.

3. You might not get the mortgage you see advertised

Now is an excellent time to be a borrower as mortgage rates have never been so low. But, even if you have the required deposit, getting accepted for one of the market-leading deals isn't easy. In fact, even the tiniest of blemishes can have an impact on your success, as I reveal in my article: 5 things that could scupper your mortgage application.

To check whether your credit rating is as good as it can be, head over to our credit monitoring channel.

4. The more you need to borrow against the property, the higher the rate

The larger the proportion of the property price you borrow, the greater the risk you are perceived by the lender and so the higher interest rate you will pay. Saving as much as you possibly can for a deposit will therefore give you to access much more competitive rates of interest.

You can compare a wide range of mortgages on our mortgage channel.

5. It pays to do your own sums

Once you've been offered a mortgage, check you will be able to comfortably afford the monthly mortgage repayments and that you won't be overstretching yourself financially.

Do your sums by using a mortgage calculator such as this one, remembering that if you've opted for a tracker mortgage, the rate is variable and could rise, boosting your monthly mortgage repayments. Consider carefully whether you can afford for this to happen.

6. If you are buying leasehold, you'll need to factor in extra charges

If you're buying a leasehold property, the freeholder (which is often a managing agent or represented by a managing agent) should be responsible for insuring the building and maintaining communal areas. But, in return, you'll have to pay ground rent and service charges which can be expensive. Be clear what these charges are, get them in writing and factor them into your budget before you buy.

7. Stamp Duty runs into thousands of pounds

Another cost you'll need to budget for is Stamp Duty which is payable on all properties over £125,000. Rates are tiered depending on the property price, and start from 1%, going up to 7% on properties worth more than £2million. This can run into thousands so don’t forget to budget for it.

8. The lender's valuation survey isn't always sufficient

Your mortgage lender will require you to have a valuation survey which calculates how much the property is worth. But this survey is only to confirm that the property is adequate security for the loan and won't spot any major problems.

If your property is less than 100 years old and in good condition, it's worth getting a Homebuyer's Report which will highlight any serious issues, although it still won't look at aspects such as wiring and drainage.

If your property is older than this, a full structural survey is your best bet as it will look more closely at the structure of the building. Unsurprisingly though, this will be the most expensive.

9. Completion can take weeks, or even months

Once you have exchanged, don't expect to move into your new home within a matter of days. While this isn't impossible, it'll usually take a couple of weeks to complete, but can even take a few months. You can agree the completion date at the point of exchange though.

Research by Move with Us shows that the average number of days it takes from putting a house on the market to completing is now 197 days (more than six months). That means that, theoretically, home movers looking to sell before Christmas need to put their house on the market now.

10. A property isn't always an investment

Finally, think of your property first and foremost as a home. While it's great to know you might make some money when you come to sell, it’s not guaranteed and your home should first and foremost be somewhere you will be happy and comfortable for years to come.

Please note: Any rates or deals mentioned in this article were available at the time of writing.

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