Take this quiz to see if you’re in a position to step onto the property ladder, you’ve got a bit more planning to do, or if you need to stop and have a serious think about what you want.
For each of the categories below, select the answer that most applies to you, tally up your score and find out just how ready you are to own property.
Why do you want to own a property?
The reason behind choosing to buy will be different for everyone, whether you want to create and feather a family home nest, invest in a buy-to-let, renovate to sell, or buy a property as a gift (half your luck!). This choice will in turn influence what you might look for in a property – whether it’s a big garden, a retreat for parents or an extra garage to park your mid-life crisis; where you want to buy; how much you’re willing to invest; what type of loan you can get; and whether you’re eligible for any government grants or tax-breaks.
Have you thought about how your property purpose can impact your investment?
- Of course! I wouldn’t even be thinking about buying if I didn’t have a clear plan.
- I know what I want, but am still fine-tuning what might be realistic.
- I didn’t know how I intended to use the property would affect things like loan eligibility.
How will you pay?
It’s all good and well to want to step onto the property ladder, but Liza Minnelli wasn’t wrong when she sang “money makes the world go ‘round”. The typical deposit for a house in the UK is 20%, which translates to around £20,000 for first-time buyers outside of London (inside London the figure jumps to £80,000).
If you have scrimped and saved to fatten your deposit that’s good, but there are other monetary factors to consider too. For example, it may still be possible to get a mortgage if your deposit falls short of the 20% mark, but you might have to pay a monthly Primary Mortgage Insurance (PMI) fee. Some lenders recommend limiting all household related payments to no more than 28% of your gross monthly income. The word ‘all’ here is important, because your payments will include more than just your mortgage; think insurances, taxes, utilities, white goods, etc.
It is commonplace for would-be buyers to seek mortgage pre-approval to get a better understanding of their financial situation, including what loans they’ll qualify for, what interest rate they’ll be offered, whether they’ll have to pay PMI and what their base mortgage repayments will be. This is a smart step, but bear in mind a pre-approval is not the same as a loan commitment; this will involve a thorough verification process that will look at your income, employment history, assets and credit record. The mortgage lender will also order a title search as well as a property appraisal. Remember, if you do qualify for a loan that is higher than you expected, you don’t need to spend the full amount! Only commit to what is reasonably within your budget based on your lifestyle and still gives you some ‘wiggle’ room if your circumstances were to unexpectedly change.
Have you done your figures on how you will pay for your property?
- I have my financial advisor on speed-dial and feel financially confident.
- I pre-qualified for a loan, but wouldn’t mind comparing a few more loans and lenders.
- I’ve just committed to a budget to save more for a deposit.
Is this the right property for you?
There are only so many listings and estate window displays you can look at, or inspections you can go to, before the initial excitement of searching for a property becomes taxing. Don’t give up, though! It’s worth getting this right to avoid costly mistakes or disappointment later. There are a lot of nice-to-have factors to consider when buying, but there are also some essential elements you should give your full attention to.
Of those essentials, it is recommended to find a qualified and reputable building inspector (one listed on the Construction Industry Council Approved Inspectors Register – CICAIR – should do the trick) or a surveyor (find a member of the Royal Institute of Chartered Surveyors – RICS) to thoroughly check the condition of your property so you know if you are, in fact, getting a good deal. There are varying levels of inspections that can be carried out, all with varying costs (starting from around £400 and going up to £2,000 as ball park figures), but a good property inspector or property surveyor will let you know if a more thorough look should be carried out.
Have you taken steps to ensure the property you want is an ideal buy?
- A qualified inspector is satisfied with their level of checks and the property condition.
- I’ve had a property walk-through, but need to have an inspection carried out.
- I was going to ask a friend to come with me to have a look.
Have you thought about insurance?
The only insurance you are legally required to get when taking out a mortgage is buildings insurance; this insurance will protect against damage to the structural aspects of your home, such as your floors, walls, roof or any fixtures. If the unfortunate was to happen, such as a fire that destroyed your home, your mortgage lender needs proof your buildings insurance will cover the cost of repair so that the value of the property reflects the same amount you borrowed against.
You may also opt for a more comprehensive policy that includes contents insurance for anything within the building that is not part of the structure – such as your carpet, curtains, furniture, clothes, sporting equipment, electrical and white goods, etc. Contents insurance will usually cover you against theft, fire and flooding. A contents policy can be purchased separately from your buildings insurance, or as part of the same policy. Policy ‘add-ons’ like accidental damage cover may be considered too.
While not a legal necessity, you may also want to consider how your mortgage can be paid for in the event of your death. Choosing to take out life insurance is a personal preference, but people find it offers peace of mind that their families or loved ones won’t be left having to foot the bill if the unfortunate was to happen to you.
When ‘insurance’ is mentioned, your first reaction is…
- I’ve compared a number of providers and know the right policy for me.
- I’m unsure if the level of cover I want to opt for will be enough.
- I need to look at what coverage levels are available.
What about the ‘extras’?
As your dream to own your own property gets closer and closer, your mind may naturally start to wander to what the finished product will be like. It’s an exciting process poring through home magazines, watching do-it-yourself tutorials and tearing pages from sales catalogues to build up a clear picture of how you’ll turn your house into a home. While you’ll be keen to get stuck straight into decorating mode, slow and steady may win the race – or you may have to put aside an extra spending pot.
If you’re furnishing a new home from scratch, be prepared to pay up to 25% of the home value. It’s a lot to spend all at once, particularly when it’s not the only cost you’ll need to bear. As your own landlord, you’ll also need to consider other costs like land tax, any initial necessary renovations, or ongoing maintenance costs (be prepared to invest between 1 to 4% of the property value on that front alone).
Finish this sentence: Property extras are something I…
- Have budgeted for and will take a gradual pace with the things I can.
- Am prepared to pay for, but may need to rethink my budget on.
- Didn’t realise cost so much!
How will you fully protect your asset?
Owning property is quite often about putting our roots down, having a place that we can truly call our own, creating stability and committing to a community we want to be a part of. With much more than money being invested, there is a lot at stake if we were to suddenly pass away. We cannot emphasise enough the importance of protecting your castle with a valid and up-to-date Will. Getting a professionally drafted Will is relatively inexpensive, especially when you consider that an invalid Will is the same as having no Will in the eyes of the law. All substantial assets, like property, should be included in your Will. For a guide on the importance of Wills and what to include, apart from of course your property, click here.
Have you thought about legal protections for your future property?
- I have a Will and am going to have it updated as soon as I put an offer down.
- I’m open to having a Will and have started jotting down some ideas.
- A Will isn’t a high priority for me right now.
Check your scorecard
You’re ready! You’ve done your research, weighed up all of the risks and benefits, carefully considered what’s right for your circumstances now and in the medium- to long-term future, and you’ve already got your eye on a particular area, if not a specific property. It’s time to take the next steps needed to become a homeowner. Instructing a solicitor early means initial searches and checks can get underway sooner and can help make the conveyancing process smoother if you do choose to go ahead with the purchase. Let the dedicated property solicitors at Insight Law guide you through the next steps.
Things are getting serious, but you’re not ready to make a full commitment just yet. Choosing to invest in property is one of the biggest financial decisions people may make over the course of their lifetime, so it’s important all your ducks are in a row before taking the plunge. You may find it useful to use the outcome of this quiz to revisit areas you’re currently unsure of, whether it’s completing primary checks on a property, checking back over your finance options, talking with your real estate agent or consulting with a property solicitor. We can help answer your legal questions – speak to one of the team at Insight Law for accurate and practical guidance.
The thought of owning your own bricks and mortar excites you, but it’s fair to say you’ve only just started researching exactly what’s involved. That’s okay! It just means you aren’t in a position to put an offer forward yet, but you’re working on it. Don’t be shy about starting to shop around online and read reviews of professionals who you can turn to for advice, in particular financials advisors or mortgage brokers, if you want to go down that route, and the property solicitors you want to deal with your conveyancing when you are ready. Phone and ask questions, see how willing professionals are to help you, which will help you choose the right fit for you. At Insight Law we guarantee our clients direct lawyer contact so that you will always be able to ask questions directly from the person handling your conveyancing.
To speak with an experienced property solicitor about your conveyancing needs in Bristol and Cardiff, contact Insight Law today on 029 2009 3600.
 Kevin Peachey and Daniele Palumbo, ‘Buying a home: How long does it take to save a deposit?’, BBC News (online), 4 January 2018 <https://www.bbc.co.uk/news/business-42565427>.
 My Home by Freddie Mac, Down payments & closing costs <http://myhome.freddiemac.com/buy/down-payments-closing-costs.html>.
 Hillary Hoffower, ‘10 hard truths no one tells you about buying a house’, Business Insider (online), 6 July 2018 <http://uk.businessinsider.com/10-secrets-no-one-tells-you-about-buying-a-home-before-you-sign-2018-2/#you-dont-need-to-spend-every-penny-of-the-amount-youre-qualified-for-1>.
 Brian O’Connell, Investopedia, Pre-qualified versus pre-approved: What’s the difference? (14 November 2017) <https://www.investopedia.com/articles/basics/07/prequalified-approved.asp>.
 Mortgage Advice Bureau, What is buildings and content insurance, <https://www.mortgageadvicebureau.com/expert-advice/mortgage-protection/what-is-buildings-and-contents-insurance>.
 Mortgage Advice Bureau, Do I need life insurance to get a mortgage? <https://www.mortgageadvicebureau.com/expert-advice/mortgage-protection/do-i-need-life-insurance-to-get-a-mortgage>.
 Jessica Walrack, Super Money, How to pay for furniture for your new home (10 March 2018) <https://www.supermoney.com/2017/05/pay-furniture-new-home/>.
 Hillary Hoffower, ’10 hard truths no one tells you about buying a house’, Business Insider (online) 6 July 2018 <http://uk.businessinsider.com/10-secrets-no-one-tells-you-about-buying-a-home-before-you-sign-2018-2/#look-into-future-building-and-development-plans-for-the-neighborhood-9>.
Posted by Insight Law on
13 November 2018