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We are sharing some really important tips for buying your own home house. This is another one of those topics that I wish was covered at school in some detail. Many teenagers and young adults have no idea about the cost and process of buying a house.
Whilst many are now buying their first house later in life due to the cost of living it is still aspirational for many young people to own their own home.
We bought our first home aged 23 and 25 and I wish we’d had been given more tips for buying a house. We were lucky and made good decisions but that was based on luck more than judgement! I plan to help my kids understand the process more and share with them the following advice!
There is advice out there and HSBC have this handy guide outlining the different Steps to Buying Your Own House?
Are You Ready to Buy a Home?
For the vast majority of people, a home is the largest single investment they’ll ever make. Nothing else really comes close to the cost of buying a house. Yet there are few who have no idea of how expensive the house of their dreams will actually end up being. They believe that if they offer X pounds for a house and that offer is accepted then that’s what they’ll wind up paying. In reality, your accepted bid is just the tip of the iceberg and the true cost will be more.
There are a plethora of hidden costs, fees, service charges and more that will get added on at every stage of the process. If you’re not ready for them they could be a shock to the system when they arrive.
Thankfully the above infographic from HSBC highlights the 10 steps to buying a home and this is the essential advice that helps educate you when making such an important purchase.
When our daughter gets to this point I want her to fully understand the house buying process. The days when lenders would give a mortgage* to almost anyone ended in 2008. Today, in order to purchase a home you’ll need to come up with a standard down payment of 5 to 10% of the purchase price. With the average price of a home now more than £200,000 that means you may have to find £20,000 – £30,000 or more.
*Lending is subject to status. Your home may be repossessed if you do not keep up repayments on your mortgage
Also, if your credit score is less than perfect you can expect to pay a higher interest rate on your mortgage. In fact, if your recent credit history is spotty the financial institution may simply refuse to offer you a mortgage at all, or require an even larger down payment; perhaps as large as 20% or more. Therefore it is really important that when you are saving your deposit you also ensure your credit rating is healthy.
Lenders can also be fussy if the deposit has been gifted by a relative, as that does not demonstrate affordability and that you can afford the mortgage. Therefore evidence of savings is often required. Our 21 year old is still living with us and we don’t charge her rent and instead, she is saving a large proportion of her salary ready for that first mortgage.
Other Costs to Consider When Buying Your Own Home
There are further costs consider when buying a home. Firstly there is a stamp duty to pay, this is a tax that the government get on house sales. The amount payable is progressive depending on the house price, you can read more about it on the HMRC website.
Next to consider when buying a house is the money that you will need to spend furnishing it. There will usually be some decor changes that you will want to make but you may also need to buy new appliances or furniture. Do check what the sellers plan to leave behind.
Finally don’t forget the cost of removals. You may do this yourself as a DIY project, then all you need is a van and some strong arms. If you already have a lot of stuff you may prefer to use a removal company to do this for you.
Buying a house is exciting but it can also be a stressful time so do your research and plan ahead to make the transition a smooth ride with no shocks! We hope these 10 Simple Steps to Buying Your Own Home has debunked some of the mystery around home ownership and the process.
This is a paid collaboration with HSBC
