Student and Graduate Publishing

Buying Your First Home

Friday, 14 July 2017 11:34

Buying a house is an ambition for most. However, the recent recession and current property market have knocked the confidence of first-time buyers. What was once an expectation for the generation of graduates’ parents, is now a tough possibility for current graduates. However, it is not impossible - graduates can become first time buyers of their own house. It's not easy in the aftermath of the housing crisis but below is some advice to make the process a bit less scary and a lot more exciting. 

Budget – and stick to it!

There are many financial aspects to consider when buying a house. This is true for anyone but first time buyers and graduates are new to the importance of real estate budgeting. The big reason for saving is to put a deposit on your house, which is usually between 5% and 20% of the total cost. However, there are many more costs involved. 

Firstly, ensure that you are financially stable enough to continue paying monthly costs. For graduates, this can mean getting a steady job and income. Finance sections of websites like Student Money Saver offer budgeting tips and advice for students and graduates to help make reaching that deposit goal a lot easier. 

Consider your options

Luckily, part of your budget can be helped by other sources. Various government schemes invest in first-time buyers and help put recent graduates on the property ladder. Numerous articles give in-depth comparisons of the best support available. For example, the Help to Buy ISA  is a popular option that boosts the savings of buyers. For every £200 you save, the government will add another £50, up to £3000. 

Other options include personal loans from friends and family. Many people move home and ask their parents for help with the deposit or even buy property together with family members. 

Do your research

Use websites like the Money Advice Service to become knowledgeable about different types of mortgages, the application process, and financial implications. 

Also know what to look for in a growing area, such as new developments or regeneration projects.  One-way of detecting an up and coming area is to look out for the first signs of ‘hipster’/ ultra cool, food types starting to move in. If there are just a few nice looking coffee shops and organic food stalls that are getting more and more popular in a neighbourhood, then more are sure to follow. This means that wealthier middle classes are starting to move in, and house prices are more likely to be ready to soar. 

Ask everyone for advice

Don't be afraid to ask anyone and everyone for advice. Good solicitors will have experience and knowledge about buying that graduates just don't have. It's worth paying for this support to save money from misinformation or misunderstanding in the future. 

Advice should also come from people that already live in an area. How about going out for a coffee or a night out close to the area where you are considering buying, and asking residents about the local area? Ideally, you should try and find somebody that actually knows of the specific property that you are thinking of buying. If someone shares warnings about noisy neighbours, then this would be crucial insider information that would put a halt to a potential disaster buy.  

Remember to factor in all the costs

There are various hidden costs that can sneak up on you if you’re not careful. Stamp Duty Land Tax is required for any residential property over £125,000. The government website explains the current rates and provides a tax calculator for you to determine your own costs. Remember to keep an eye on these tax limits, as they have recently increased.

Other outgoings include moving costs, buildings insurance, valuation fees, initial decorating costs and solicitor payments. If the survey of a property is over ten years old, you should invest in a new one, which adds almost another £1000. 

Be realistic

Follow your dream and go with your gut but also, be realistic. Don't expect all the perfect qualities in one idyllic house. Prioritise what you want and try to stick to budget. Maybe the area is great but further from work. Or the house is lovely and cheap but needs some modernising. Negotiate and compromise, expecting the best of everything will only be restrictive. 

Take it slow

Last of all – take it slow. Don't rush; investing in real estate is a huge commitment, and mortgages of £1000’s should not be taken on lightly.  Also, getting over excited at your dream house and letting an estate agent know how much you want it could reduce your negotiating power. Instead, make an offer within a day but not straight away. Finally, don't worry about rejection. It's a big part of the process and usually the first step of it.