When you decide to buy your first house there are many things to consider: what colour to paint the walls? or where you are going to put that bookcase? so it is easy to forget about some of the (perhaps) less exciting, but nonetheless important, things.
To assist, we compiled a non-exhaustive list of matters below to consider before purchasing your first house.
1. How much is my house actually going to cost?
Firstly, there is the major cost, the purchase price. Your home is probably the most expensive thing you will ever buy, so the price is very important, but there are also other costs to consider.
Have you thought about how you are going to fund the purchase? If you are obtaining a mortgage, how much will your monthly repayments be?
Once your mortgage or alternative funding is in place, it is time to think about the other costs of purchasing a house. Have you set money aside for search fees, surveys and solicitors’ fees? Further, once you have exchanged contracts, the risk of the property will pass to you, so you will need to put home insurance in place.
Have you also thought about Stamp Duty Land Tax? Once the Stamp Duty holiday is over and Stamp Duty becomes due again, can you afford to pay this along with the other expenses of purchasing a house? There is no guarantee that your purchase will complete within the Stamp Duty holiday “window”.
How are you funding your deposit? Do you have enough savings or available funding to cover this?
The traditional amount required for a deposit has been 10% of the purchase price. However, with the current climate, some lenders are requiring at least 15% or higher. Do you have enough funds to meet this?
3. What is the difference between freehold and leasehold?
There are advantages to both, however, its important to know what you are buying.
If the property is leasehold, how long is left on the lease? If there are less than 70 years it can make it quite difficult to get a mortgage for the property and you may have to look at extending the lease, which will come at an additional cost.
Further, have you asked how much ground rent and service charge is? And is this paid in arrears or in advance?
If the property is freehold, it is not uncommon for homeowners to pay a contribution towards the upkeep of communal areas. Would this be relevant to the property you want to purchase?
4. Should I make a Will?
All is well, you have bought your dream house, moved in and are putting together the flat pack furniture: however, what if something were to happen to you or your co-owner? It is a good idea to make a Will once you decide to purchase a house, so should the worst happen, you can decide to whom you would like your share to go pass. This is usually an easy question when you purchase the property with someone else, but if you own the property solely, to whom would you like it to pass?
We hope you found this whistle-stop tour of considerations, informative. There are obviously many other considerations, but hopefully this gives you some idea of what you should be aware when purchasing a property.
Get in Touch
Should you like to speak to one of our solicitors regarding a purchase of a property, or to enquire about making a Will, please speak to a qualified member of staff on 0118 958 9711 or at [email protected]