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Wednesday, 30 July 2014

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Top tips to take the stress out of buying a new home

Buying a house was stressful enough before the credit crunch arrived and is even more so now. It’s hard work, many things can wrong and delays are never far around the corner.

But it’s not impossible and following some simple guidelines can help.

How much can you afford?
If you are looking to buy a house on your own, a lender will agree to offer you at least three to four times your income, though this figure may have tightened in some cases since the credit crunch.

If you earn £30,000 you can obtain a loan for at least £90,000.

A couple are likely to be offered 2.75 to three times their joint income. Some lenders will offer bigger income multiples if they think that you have enough disposable income to meet the monthly repayments.

Househunting
Contact estate agents in your chosen area and ask to be put on their mailing lists. Encourage them to ring you when suitable properties become available.

The internet is a useful research tool, with websites such as mortgage comparison tables, but remember that websites are not always completely up to date.

View as many properties as possible, preferably in the daylight. When you find one that you really like, return for a follow-up visit at a different time of day and take a friend or relative for a second opinion. Take this opportunity to inspect the area more closely.

Make an offer
Ring the estate agent and make an offer. To decide how much to offer, consider how long the property has been on the market and whether any work needs to be done.

These could be bargaining tools to offer less than the asking price. If the offer is accepted, ask for the property to be taken off the market.

This helps to prevent gazumping, which is when someone else makes a higher offer that the estate agent must pass on to the seller. Your offer is not legally binding, unless you live in Scotland.

Arrange your mortgage
To choose a mortgage, you can either find one yourself using the internet or by asking lenders directly.

Alternatively, you can use a mortgage broker. Sometimes brokers, who have access to all the products in a particular market, will be able to find the cheapest deals more easily.

Once the application is submitted, the lender will carry out credit checks and tell you, often within 24 hours, if your application has been accepted “on principle”.

Appoint a solicitor or conveyancer to do the legal work. Some mortgage brokers will recommend one if you cannot find one yourself. Check The Law Society for names, then call a few to ask for a quote.

Arrange a survey
The property needs to be valued to establish that it is worth the asking price before your lender agrees the loan.

You will need to pay a fee for the survey. If the lender is happy with the results, you should receive a formal offer within two weeks.

However, this basic valuation survey is not enough if you want to know about any potential problems with the property. A homebuyer’s report or full structural survey will give a more detailed picture. These might be included in the seller's home information pack, but are not compulsory.

Sign the contract
Your solicitor will present you with the contract, unless he or she has uncovered any legal complications. The seller also has to sign a contract.

Once signed, the contracts will be exchanged. You will then have to pay the deposit to your solicitor, which you would lose if you were to pull out.

You will have to wait about four weeks for completion, which is when the mortgage is passed on to the seller and you are given the keys. Do not forget to book your removal company.

What can possibly go wrong?
Your offer could be refused: Only offer a higher amount if you can afford it, no matter how perfect the property. Otherwise, it is back to the drawing board.

You are gazumped: A painful and frustrating experience, unless you are buying in Scotland.

The seller backs out: This can happen at any point until contracts are exchanged.

Your mortgage application is refused: If your credit score is not high enough, or if the survey uncovers problems, the lender can back out.

You back out after exchanging: You lose your deposit.

Your solicitor finds problems with the title deeds or uncovers any planning applications that affect the property.

Good luck!

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