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7th April 2016
Demand from first-time buyers shows no sign of slowing down, as more people attempt to scale the property ladder. Over the past year, the number of keen-to-be home-owners has risen by 38.8%, putting upwards pressure on the property market - the average price of a first-time home in the UK now stands at £165,945.
Brighton and Hove tells a different story, with the average cost of properties hitting an incredible £300,000, 53% higher than the national average. And the market shows little sign of stopping, crying out to those hesitating on the side-lines, “buy now, while you still can.”
With such a large amount of money in question, it is unsurprisingly daunting for first-time buyers, torn between rapidly increasing rent in the city and the difficult task of scraping together enough money to afford a minimum 5% deposit. However, if you are in a financial position to buy but are put off by the unknown process, let us initiate you into the secret society of property purchase:
It is best to secure a decision in principle before you start your search. A decision in principle is a certificate from a lender to say that ‘in principle’ they will lend you the money. This gives you a better position when making an offer. Competition is high, particularly in Brighton and Hove, and it’s possible you will find yourself in a best and final bid situation, sometimes bidding against many keen buyers.
Vendors will be advised by their estate agent on the best buyer, which is based not only on the amount of cash you put down, but also on your position - are you in a chain? How big is your deposit? Can you guarantee a mortgage?
When embarking on your mission, make sure you have enough points in your favour to give yourself the best chance possible of securing the home of your dreams.
The cost of buying a property doesn’t stop with the deposit and it’s a good idea to keep a chunk of your savings aside for the extra bits. These include:
● Mortgage arrangement - some mortgage advisors charge for their services. However, others, such as our in-house CeMAP qualified mortgage specialist, Graham Griffin, offer free advice with no obligation. This isn’t the norm so it’s best to determine the cost from the offset.
● Valuation fees - your mortgage lender will need an independent valuation of the property to determine whether the price you’re paying is what the property is actually worth. This is important, if you bid too high, you could risk not getting the full mortgage. Valuation fees will often be added onto your mortgage; the costs depends on the provider you go for.
● Survey fees - there are three options available and the price depends on how thorough you wish to go. Surveys show you the condition of the property and, for first-time buyers who don’t always know what they’re looking for, it is advisable to go for a homebuyer’s survey (see below for more information).
● Stamp Duty - calculate the cost of this using our stamp duty calculator.
● Solicitor’s fees - ask for recommendations and read online reviews. Don’t just go with the cheapest, a good solicitor will make a huge difference during the buying process. Check out our conveyancy advice.
● Life insurance - this is particularly important if you’re buying a house with another person. The cost of this depends on the provider and premium you go with.
● Removal costs.
● Buildings insurance - if you’re buying a flat, this is usually included in your monthly maintenance costs. You will still be required to buy contents insurance.
Before you contact an estate agent, and after you’ve decided on a budget and location, determine a list of must haves - outside space, two bedrooms, good school area; nice to haves - a sea view, parking space; and absolutely can’t haves.
Searching for your first property can be exhausting. Your list of requirements will help you be more targeted and, if communicated effectively, will help your estate agent put you in front of the most appropriate properties for you.
Brighton and Hove is a seller’s market and properties get snapped up quickly, which means you need to act fast or miss losing out. Although we’d never advise rushing your decision, we have seen desirable properties get sold STC on the same day they went on the market, with numerous people making an offer.
If you like a property, make an offer. But be prepared to keep some of your budget aside in case you need to go above asking price with a best and final bid
Although you don’t legally have to, we would always recommend getting a homebuyer’s survey completed before you advance with the sale, particularly as a first-time buyer. This will tell you if there is anything wrong with the property and could save you money further down the line.
The average cost of a homebuyer’s survey is £350. For a more basic review of the building condition, you can also opt for a condition report, and for a more detailed review, go for a building survey. Here’s a more detailed explanation of the difference between the three.
Once you exchange contracts, the vendor can’t legally pull out of the sale without significant financial repercussions. This also means you are bound to the transaction and pulling out after this point could cost you 10% of the price of the property.
You usually exchange contracts between 7 and 28 days before completion. Before exchanging, you should make sure everything is in place and you are 100% happy with the purchase. You should only exchange contracts after:
● You have agreed an offer, including all fixtures and fittings
● You have completed all surveys and followed up with anything that has been flagged on the survey eg. electrics and gas checks
● You have been formally offered a mortgage in writing and your solicitor has obtained all relevant documents to secure this
● You have arranged funding for the mortgage deposit
● You have sorted funding for the contract deposit (this is typically 10% of the property cost and is the first amount of money that comes out on exchange. The rest will be released by your solicitor on completion)
● Your solicitor has done all relevant searches
● You have organised building insurance, if necessary (after you exchange, you are liable for the property and so you need building insurance in place before hand)
● You have agreed a completion date and time, which will be written into the contract (see below for more information)
● You have read, understood and signed the contract and transfer documents
Completion day is here, but what should you expect?
This is the day the money is transferred to your solicitor. Your solicitor will then pay it forward to the vendor’s solicitor, who will use it to pay off the remainder of their mortgage, giving them the difference. You will then get the keys and the task of moving can begin.
The time of completion will be agreed in your contract and it’s important to ensure all money reaches your solicitor’s account before this time. If you do not meet the deadline, you will be charged interest on the full amount, which will not be insubstantial.
Once you have completed, the property is yours’ and you are free to make it your own.