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Five ways to avoid common homebuyer mistakes

When buying a property it is difficult to know what to look out for and what to expect.

Being aware of potential issues in advance can protect you from costly mistakes. As mortgage advisers, we know all the pitfalls you might face. Here are our top five hints and tips to try and avoid the most common homebuyer mistakes.

Before setting out on your property journey it is important to have an idea of how much you can borrow and afford. The amount you think you can afford and what a mortgage lender thinks you can afford can be different. The benefit of a mortgage adviser can be invaluable at this stage in ensuring you are looking at realistic property values.

Your mortgage adviser will likely ask to see a copy of your credit report to ensure you are likely to be in a position to secure a mortgage. It can be a good idea to secure an agreement in principle for the mortgage amount your adviser feels you are able to borrow. This also helps when you start to offer on a property and will give both you and your vendor confidence during the negotiation process.

Whilst you might feel most comfortable going directly to your bank, this isn’t necessarily the best option. Banks offer only their own mortgage products which may not be your best mortgage option. The right mortgage product can save you thousands in interest. Ensure you explore all of your mortgage options.

Some mortgage lenders are reluctant to lend on unconventional property and can also be cautious of property such as Grade 1 listed buildings, apartments above shops/restaurants, and property built on old industrial/commercial land.

It is important to speak to both your agent and critically, your mortgage adviser before offering on such a property. Your mortgage adviser will be able to discuss your options whether that be using a particular lender or avoiding the property type in general.

Property tenure, i.e. leasehold or freehold, is also an important factor. Leasehold ownership of a property is simply a long term tenancy and typically applies to apartments. The length of a lease can be as long as 999 years, however, if the lease period is for less than 80 years this could prove to be an issue with a mortgage lender. The price of extending a lease can be costly so this is also something to consider.

Additionally, leasehold properties can come with additional expenses such as ground rent and service charges. It is important to factor these in when considering your budget.

Some estate agents and new build developers will recommend a mortgage broker to help you with your finances and may even suggest that if you buy a property through them you will be obligated to use them. This is normally not the case and you are free to shop around and use a company you feel happy with.

It is vital to check what fees will be payable as some mortgage brokers charge an upfront fee whereas others do not charge a fee for their advice and instead get remunerated through the lender.

Home insurance is something else to consider shopping around for. Homebuyers have been known to take out buildings insurance with the lender because they thought it was a condition of the mortgage, however, usually this is not the case and you are free to shop around for the best deal. It is worth noting though that occasionally the lender may impose a buildings insurance fee of around £25 if the insurance is not taken out with them so it is best to take this into consideration before proceeding.

Try not to underestimate the costs involved when budgeting for a house. Stamp duty, conveyancing fees and mortgage related costs can quickly mount up and if you also have a property to sell you will have to take into account estate agency fees too.

Your mortgage adviser will be able to talk you through all the fees associated with purchasing and selling.

Additionally, when purchasing a home and considering your budget, don’t underestimate your bills. In addition to the usual utilities, you will need to pay for buildings insurance and life insurance to protect your secured mortgage commitment.

It is incredibly easy to fall in love with a property and become attached when trying to find your next home. However, the property must be practical, affordable and in a location good for you. Don’t let your attachment to a property mean you end up paying more than you should for it.

For more mortgage advice tips, see our advice for first time buyers.

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