Buying a home is tricky, and it has never been more so than in the present age. Although many people in their 20s and 30s right now are criticised for spending “lavishly” instead of saving for a house, the truth is that a lot of the people criticising don’t realise how hard that is. In the 1960s and early 70s, the average house price was less than the average annual wage. Today, the number is closer to ten times the average salary, which means that only the very fortunate can buy without a mortgage.
Nonetheless, buying a home these days is neither impossible nor a bad idea if you work within some parameters. Buying a property can certainly give you a level of security that is not automatically granted to renters in today’s market, and particularly in the pandemic era. If you follow the tips set out below, then it can be an easier and more encouraging process all around.
Never be afraid to ask questions
If you are buying a home, it is a big decision to make and a life-changing experience, so it is not something that should be entered into lightly. There is a tendency to be acutely embarrassed about asking questions of someone whose house you wish to buy, but it is necessary. You’ll need to keep paying rent while you wait to move in, so ask when they are able to vacate. Are they in a chain? They might be waiting for a divorce settlement to be finalised before they can close on their next house, or the house might need essential works. A good list of questions to ask can be found here.
Borrow smartly, save smartly
People looking to buy a new house will first arrange a mortgage consultation to see what price range they can afford to buy in. It’s important to realise that the amount you are offered does not need to be the amount you borrow. If you can find a cheaper house that you like, only borrow enough to buy that and move into it. There’s no point taking on more debt than you need. Also, if you are under 40, you will qualify for a Lifetime ISA, which gives you £1000 annually as a top-up when you save £4000 – it does you more good to put that money into an ISA than in mortgage repayments you’ll never see back.
The buying price is just part of what you will pay
As the previous paragraph said, you should borrow only enough to buy and move into the new house. So remember that you are likely to have other costs; you may need to furnish the new place in part or in whole, there may be repairs or adjustments you need or want to make – an inspection, which you will also need to pay for, will reveal the full picture. These outgoings will only be a fraction of the full cost, but include them in what you borrow; the terms of your mortgage will be more forgiving than putting these costs on a credit card or taking a personal loan to cover them.