Common mistakes when buying your first home

There are some common mistakes that buyers make when they are buying a house. Some of these are not very important but some can have significant and long-lasting impacts.

Buying a home is a big decision that involves a lot of financial commitment so you need to make sure you’re reducing the risk you take on by being aware of the common mistakes in the process.

From not saving enough money to not using a solicitor, this article lists all of the common mistakes a buyer may run into.

Not saving enough for a deposit

If you do not save enough for a down payment on a house, you may face some consequences in the future, even if you are able to gain the approval for the mortgage to begin with.

First of all, you will likely face higher interest rates because you are a higher risk to the lender, lenders may charge you a higher interest rate if you have a smaller deposit.

Furthermore, you may be required to pay mortgage insurance to protect the lender in the event of a loan default because you are just about meeting the stress test for the property. In addition, expect larger mortgage payments. With a smaller deposit, you will need to borrow more money, resulting in higher monthly mortgage payments.

Perhaps the biggest consequence is you may not be able to qualify for certain mortgage products or buy the house you want if you don’t have a large enough deposit and you’ll also have a longer repayment period. If you have a smaller deposit, you may need to extend your mortgage repayment period to make your monthly payments more manageable.

In general, the higher your deposit, the more you can borrow and the easier your loan will be to pay back. Avoid the mistake of jumping the gun too soon and save up more of a deposit to prevent this mistake.

Not using a solicitor

While not using a solicitor can save you some money, it is not always recommended for first-time buyers to forgo using a solicitor, even if they think they are well-researched on this side of the law.

First-time buyers are usually on a stricter budget so it makes sense for them to not want to use a solicitor. However, the costs that can rack up from repeat searches of a property from doing it wrong and having to pay tax arrears for instance may make it not worth it.

Especially if you want to have the peace of mind you’re doing everything legitimately and you aren’t breaking any parts of the law.

As well as this, if a first-timer buyer doesn’t use a solicitor they usually have to accept liability for anything that goes wrong throughout the transaction as they are then liable for losses without legal insurance.

Applying for too many agreements in principle

When you apply for an agreement in principle (AIP), the lender will most likely run a soft credit check to determine your creditworthiness. This is usually a harmless process but things can still go wrong if you’re not aware of what a lender is doing.

Most of the time, a soft credit check leaves no trace on your credit report and has no effect on your credit score. However, if you proceed with a full mortgage application and the lender conducts a hard credit check, this can leave a mark on your credit report and may temporarily affect your credit score.

Also, sometimes the application for an agreement in principle can also involve a hard check but a buyer doesn’t realize it. So, in cases where there are a lot of applications to a mortgage in principle all at once in a short time period, it can affect a credit score.

The credit score typically goes down because it appears to creditors that you are applying to a lot of loans at once which indicates you are desperate for credit and your score will therefore drop.

Nonetheless, the impact of a hard credit check on your credit score should be minimal, and your score should recover over time as long as you make your mortgage payments on time and maintain a good credit history following this mishap.

Not checking the property for defects

When considering purchasing a home, it’s critical to look for flaws that could affect its value, safety, or livability. Here are some of the most common property flaws to look out for:

Look for signs of cracks in the walls or foundation, sloping or uneven floors, and sagging rooflines. Also, check for dampness or water damage in the walls, ceilings, and floors, as this can lead to mould growth and other health risks.

As well as this, looking for any signs of electrical problems and ensuring that the electrical system is up to code and functioning properly is a good idea. In addition, check for signs of water damage or leaks, such as mould or mildew growth, musty odors, or warped or discolored walls and ceilings.

Insect or rodent infestations are also something that can sneak up on a buyer and cost them money to get rid of. Look for droppings, nests, or damaged woodwork to indicate an insect or rodent infestation.