...By Henry George for TDPel Media.
Buying a home for the first time is a daunting task.
There is an entirely new vocabulary to learn, etiquette to follow, and decisions to be made.
To help first-time home buyers, we’ve compiled a list of the top questions that come up time and time again and the answers from some of London’s top property professionals.
How do I make an offer on a property?
According to Chelsea Whelan, a partner in Knight Frank’s Notting Hill office, offers need to be made to the selling agent.
It is also suggested to put the offer in writing, providing as much detail as possible to support your offer.
This includes information about your deposit, proof of funds, mortgage offer, timeframe, and solicitor details.
Matt Johnson, senior sales manager at JOHNS&CO, suggests giving as much information as possible to help the seller make an informed decision.
It’s worth mentioning that flattery can go a long way too.
Vendors have been convinced to go with a buyer because they showed their love for the house and expressed their excitement about living there.
Will this property be a good investment?
James Turner, associate in Knight Frank’s Hampstead office, warns that nobody can guarantee strong price growth. A smart buyer will take any such claim with a grain of salt.
In general terms, the trajectory of London’s property values has been upward for generations.
So providing you are willing to stay long enough for prices to rise, you should turn a profit.
Areas with new transport improvements on the horizon, regeneration zones, and locations on the fringes of more expensive postcodes tend to see outperforming price growth.
It’s also worth considering a property with potential that you can upgrade over time to add value.
What is the lowest price the seller will take?
Most vendors do have a bottom line, but neither they nor their agent will be willing to tell you what it is.
You have to make an offer based on what you can afford and what, based on research about local selling prices, you think it is worth.
You can also try to assess how desperate the buyer is to sell. If they are relocating for work, the property has been on the market for months, or they have another place they are desperate to buy, they are more likely to negotiate.
Plum Fenton, London specialist at buying agent Haringtons, suggests making a reasonable opening offer and waiting for a counter-offer that will give you their bottom-line or at least the level of their expectations.
Can I borrow the Stamp Duty payment and add it to my mortgage?
The only buying cost which is routinely added to your mortgage is the arrangement fee. Stamp Duty is paid after you’ve completed on a property, so it is feasible to borrow extra to pay for it.
Ray Boulger, senior technical director at John Charcol, suggests checking whether the affordability calculator says you can afford a slightly bigger mortgage. However, be careful not to tip yourself into a higher interest rate bracket.
Interest rates depend on “loan to value,” and interest rates usually go up in five per cent increments.
Therefore, you might be able to borrow a few thousand more without penalty, and your broker or mortgage lender will be able to advise you on this.
What is the difference between exchange and completion?
Expect it to take somewhere from three to six months to buy a property, once you have had your offer accepted.
During this time, there are many hurdles to clear, and exchange and completion are the two big ones.
Exchange is the point at which you formally agree to buy the property, and you must put down a deposit, usually 10 per cent of the value of the property, which you will forfeit if you change your mind.