Buying your first property is an exciting, monumental time but all too often it can be easy to rush into the process without taking into account some vital points which could lead to dire consequences later on. That’s why most people work with real estate agents because they know what to look for when you buy property. Here we list five of the simplest, and most important mistakes to avoid when buying property to help you buy your first home with clarity and peace of mind.
1. Buying a Fantasy
While house viewings are free, or even better – virtual in today’s current circumstances – it can be very tempting to view houses that you know are realistically out of budget.
However, spending too much time searching for properties outside of your financial range and stretching your budget to try and fit these properties will only lead to tricky situations in the long run, such as when it comes to affording general upkeep expenses on the property, and utility bills. When searching seriously for a new home, it’s far better to sit down and calculate exactly what your price range is, and then stick rigidly to this whenever you are looking for properties.
Make sure you are thorough in your expense calculations. Include all potential costs such as legal fees, house survey costs and title fees, as well as household bills like homeowners insurance, buildings insurance and property tax.
2. Failing to Research
The rise of the Internet and popular property searching portals have made the process of searching for a home as easy as entering a location and filtering to your tastes. While its convenience is not to be disregarded, that simplicity is behind the rise of new problems for home buyers: the problem of research.
In its online listing, both the home and surrounding area may appear as something entirely different, and often a first physical viewing will not flag any major problems with new potential neighbors or external noise like traffic or train lines as your attention is usually focused entirely on the house.
However, purchasing a property without doing due diligence of where it’s situated could lead to huge, irreversible problems along the line. Always ensure to spend as much time in the area as possible before committing to buy, especially if you are moving some distance and are entirely unfamiliar with the area. If possible, go by at varying days of the week and at differing times to help build a more realistic picture of the street and city or town where your new property is located. Not doing thorough research is one of the most common mistakes to avoid when buying property.
3. Not Asking Questions
Although it can seem rude and slightly uncomfortable to view another’s property and start asking probing questions, that’s exactly what you should do – even if your new home is a new build.
Rushing into making an offer just because everything appears perfect on the surface and you don’t want to offend anyone could come back to bite you when the original owner’s cabinet has fallen off of the wall and revealed a huge patch of mold.
Before attending viewings, think up a list of questions that you’d like to ask. Inspect or ask about things such as window fittings, doors and lights, as well as water pressure, dampness and any flood risks. If possible, look behind too well placed furniture and upholstery that could be concealing defects.
Be sure to ask questions about the sellers too. Asking how long they’ve lived at the property and their motivation for moving can give you key insights into the area, just as it can if their property has been listed for a while.
4. Choosing The Wrong Property
While this might seem an obvious tip, we don’t just mean too big or too many bedrooms. If you are applying for a mortgage, there are certain property types that can make the process complicated and will make mortgage lenders reluctant when it comes to helping with your application. This is another of the mistakes to avoid when buying property.
For example, if your potential property is for a condo above a shop or other commercial property, some lenders will be reluctant to grant you a loan.
This is usually because those types of properties — ‘non-standard’ properties — are at greater risk of being affected by things like noise, smells and potential security issues such as robbery. As these are beyond the owner’s control, they could later negatively affect the value of the property.
New-build home buyers could also encounter the same problem with their properties. Mortgage lenders often become stricter with the amounts they’ll lend, so as to protect themselves against the property losing value in the early years of ownership.
If you are considering purchasing one of these properties, be sure to seek expert mortgage advice, but also work closely with a trusted and experienced estate or property management agent who can benefit your mortgage application by providing you with as much information as possible.
5. Failing To Differentiate Between Leasehold And Freehold
Properties fall into two categories: Leasehold and freehold. Depending on which of these you purchase depends on whether there are limitations as to what you can do with your property, and could come with extra fees.
If your property is a leasehold, you have the right to live in the property for a certain number of years which will be specified clearly on the lease agreement, but you do not own the land it is situated on. This means you will need to get the permission of the freeholder – the person who owns the land – if you wish to make significant changes to the alteration of the property or its ground. Additionally, leaseholders pay ground rent and other service charges.
If you purchase a freehold property, you are the sole owner of both the house and its land, which means you can make alterations in conjunction with council or city planning regulations. You will not pay rent, service charges or permission fees but you are solely responsible for the maintenance of the building unless you enlist the help of a property management company.
It’s vital to be clear on the differences between these property types to avoid falling into unexpected costs or significant restrictions later down the line.
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We hope you found this blog post on 5 Mistakes To Avoid When Buying Your First Property useful. Be sure to check out our post on House Hunting Tips for First-Time Home Buyers for more great tips!
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