Buying a home
Have you got everything in order?
If you’ve ever moved home, you know how complicated (and stressful) it can be. Buying a property can be even tougher on your nerves because it adds quite a lot more to think about.
Getting a mortgage is the main thing you will have to do. But there are other things you need to get sorted both before and after the mortgage is in the bag.
Checklist - Before you buy
- Ensure you can afford all the costs: The biggest cost is the mortgage. But what about the one-off costs such as solicitor’s fees, building surveys and stamp duty? Even your home-hunting costs such as travel should be considered.
- There are also ongoing costs: Don’t forget about building and contents insurance premiums, mortgage protection insurance, general household bills, ground rent, council tax and regular property maintenance.
- Get your ducks all in a row: A good starting point is to run through all the different mortgage options. You also need to line up a solicitor – ask family or friends for a recommendation. A broker could also give you some names.
- Research the housing market: Before you make an offer on the home you want, it's best to look at other similar properties in the area to see how much they are changing hands for. Are they meeting their asking prices or are they falling short? Log on to websites such as Rightmove and the Land Registry to get a sense of what properties have sold for, not just recently but also in the last two years or so. This will help you work out an offer.
- Handling estate agents: Estate agents can have a dubious reputation. But it’s important to build up a friendly and professional relationship with them. Questions are very important when you go to a viewing. Ask the estate agent: Why is the owner selling? How long have they lived there for? How long has the property been on the market? What are the property's boundaries? Any offers so far? Any issue with noisy neighbours? Also, don't be afraid to peek under the rugs or shift the furniture for any hidden cracks or damp patches.
- Know the neighbourhood: Check out Ofsted reports for local schools, bus and train routes to get to work and the local amenities – for instance, are there swimming pools, cafés, supermarkets nearby? Starting a chat with local shopkeepers and would-be neighbours on your street could also give you an idea of how friendly the area is.
Checklist - After you buy
- Organise your move: You can use a professional removals service which you can find either by word of mouth or by going to the British Association of Removers website. Here you will find firms with minimum standards of conduct and professionalism and you should be covered for any accidental damage.
- You could get a white-van man to do the work: But they may employ casual labour and you may not have any legal redress if something goes wrong. You could, of course, hire your own van and do the work yourself or with a friend.
- Sort out any remaining issues at your current address: There will be a few things to cancel – such as gas, electricity, council tax, water, telephone, broadband, satellite TV. It’s best to do this as soon as possible, so when you move into your new home you are ready to use these services straightaway. If you want to end a service, and are not just going to switch over, then do it well in advance as there may be a notice period. And don't forget to get your final bill! Also, sort out new accounts for your services at your new address. Plan ahead and you can get these activated from day one. All of these items may require you to get a credit check, so it’s a good idea to find out your Experian Credit Score beforehand.
- Electoral Register: This is vital to ensure you are eligible to vote and will also help keep your credit report healthy. You can do this online – just visit www.gov.uk/register-to-vote
- Change of address: Think of all the people and organisations who need to know your new address. Your employer, TV Licensing, the DVLA for your driving licence, the HMRC and your bank, for example. For those you forget, then contact the Royal Mail to organise a forwarding service which will re-direct your mail to your new address for up to 12 months. You don't want bank statements or wage slips to go astray as that is a serious fraud risk.
How your credit score really affects your mortgage
A mortgage is probably the biggest financial commitment you’re ever going to make, and there are many different types of mortgage out there – from fixed-rate and variable rate to repayment and interest-only.
One of your biggest concerns could be the amount that you pay each month. This will depend on a number of things – the type of mortgage you go for, the amount that you borrow, but most importantly, the interest rate on the mortgage. So it’s important to make sure that you find the best deal for you.
When you apply for a mortgage, your lender –the bank or building society – will use the information on your application form, along with the information in your credit report, to give you a credit score. By checking your Experian Credit Score you’ll get a good indication of how successful your mortgage application might be. Your credit report includes details about whether you’ve kept up to date with payments on loans and credit cards, and the total level of credit that you already have. The credit score the lender gives you tells them whether to accept you as a customer or not – the higher your credit score, the better your chances are of getting your mortgage.
And that’s not all, the better your credit score, the better the deal you might get with a lender. If you have a high credit score, you’re generally seen as a lower risk. This means that you may be able to get a mortgage with a lower interest rate, or one that has a discount rate. So a better credit score means that you could end up paying less every month.
It can pay for you to use a mortgage broker or adviser as they have an in-depth understanding of the mortgages that lenders are giving out, and who they’re giving them to. If you get your credit report and show it to a broker, they may well be able to point you in the direction of the best deal - which could give you a better chance of being accepted. And there’s plenty you can do to improve your credit score, such as making sure payments on credit cards and loans are all up to date, and bringing balances down. This gives you an even better chance of getting the best mortgage available.