The property market, anywhere in the world, can be dauntingly difficult to navigate. During the property purchase process, there are several mistakes that a home buyer could make, especially if it’s your first-time. It’s wise to learn from others’ experiences and not repeat the same mistakes. We don’t want uncertainty and fear to melt away the happiness and excitement of buying and moving into your first home. Following are some common mistakes that we want you to avoid as first-time homebuyers. We will run you through some amazing tips to prevent you from ending up in a potentially difficult position.
1. Buying More House Than You Can Afford
It’s easy to fall for super-luxury homes that might stretch your budget, but overburdening yourself is never a wise thing. It increases the risk of repossession and could be harder to make both ends meet at home. Never go for the maximum loan amount you are qualified for, instead always check your monthly budget and decide how much you can spend.
2. Not Planning Far Enough
Buying a home requires some serious calculation and planning. Rushing the process of house hunting or mortgage finalization can cost you big time in the long run. Plan at least a year or so for your home buying timeline.
3. Depleting Your Savings
It’s a dangerous idea to spend all your savings on a mortgage deposit. Paying a 20% deposit to get the best interst rates may seem an attractive idea but it involves a huge risk factor too. They say when it rains it pours – Any unforeseen financial situation that can’t be dealt with due to lack of funds can cause serious problems.
4. Being Careless About Credit Score
When trying to secure a mortgage, poor credit scores hurt. The majority of lenders pull credit reports to judge your financial credibility. Repay your debts on time, and never use your credit card beyond 45-50% of its limit. With Prysm Property, since the mortgage is secured at the end of the Tenant-Buyer agreement, you have time to improve your credit score.
5. Striving For The ‘Mandatory’ 10% Deposit
For a number people in the UK, saving a 10% deposit may take a lifetime. Also, remember that a 10% deposit is not a mandatory requirement. Prysm Property offers a scheme where you can start with as little as 3% deposit. Saving for a 10% down payment will not only delay your home purchase but could also see property prices rise significantly in that time, as has happened during the pandemic.
6. Overlooking Available Financial Help
Qualifying for a conventional loan without at least a 10% deposit is hard. Delaying your first home purchase without exploring financing options available to you is not wise. Apart from government schemes, first-time homebuyers can check out the Prysm Property Tenant- Buyer Scheme and get onto the property ladder with as little as 3-5% deposit upfront.
7. Miscalculating The Hidden Costs
There are various potential expenditures to budget for as a new homebuyer. The net expenses include mortgage insurance, property taxes, buildings insurance, contents insurance, repairs, maintenance, and utilities. Always make a budget taking into consideration the costs and you are likely to encounter and add a contingency for the ones you aren’t so sure of.
8. Making an Uninformed Offer on Property
Before making a purchase, always do thorough market research. This includes noting the prices of similar properties for sale and already sold in the area. Read our blog “7 Useful Things To Consider While Making An Offer On A Property” to learn in detail the art of making an offer on a property.
9. Not Securing a Mortgage First
In a competitive UK market, you could easily lose a property if you haven’t got prior approval for a mortgage. It is advisable to first secure a mortgage and then look for the home of your dreams. Or you could move into your first home without the hassle of securing a mortgage first, with the Prysm Property Tenant-Buyer Scheme. With Prysm Property by your side as a first-time buyer, when you to go into the market, you’ll be informed and ready to capture the home you’ve always wanted.
