Complete Guide to Buying Property in South London
Getting on the property ladder is a pivotal moment in most people´s lives. With house prices high in London and despite the double dip recession, finding a property to suit your needs can bring anxiety and financial worry but it doesn’t have to be difficult. It is still possible to find good quality housing in the London area without leaving you with empty pockets.
Firstly, you need to work with an excellent Estate Agent – that’s where we come in. Secondly you need a general understanding of the process and the issues involved – that’s where the guide below comes in.
As with any large purchase, the first step in the buying process is to determine your budget. Mortgage providers now have strict procedures in order to check your ability to afford your monthly repayments, including any potential changes in circumstance such as having children or being made redundant. You will also need to provide evidence of your monthly outgoings and income.
There are additional Government schemes to give buyers a helping hand. It is worth looking into the government Help to Buy scheme (which expires at the end of 2016). If you are eligible you may qualify for a loan from the Government towards a new property, or they will guarantee your lender that they will cover part of the losses in the event of your mortgage not being repaid.
Once you´ve set a budget you will need to evaluate your cash reserves for a deposit. Lenders no longer allow for 100% mortgages so you will need to have some of the money available. This can be anything from 5%-20% of the total cost of the house.
There is no definitive amount, however, you will be able to secure a preferential mortgage deal if you have at least 10% of the total cost to contribute as a deposit and anything above that may be even more beneficial depending on the lender. For first time buyers saving for a deposit, the government are currently offering Help to Buy ISAs as part of their Affordable Ownership Scheme. The government top up your savings towards your first deposit by 25% and you don´t have to pay it back.
There are other costs which come with buying a home which must be considered. These include Stamp Duty, which is the tax paid to the government, and the Land Registry Fee to register the property in your name. This varies depending on the area and value of the property, but you can use the government website calculator to check the cost of this. Solicitors fees will also need to be paid so make sure you hunt around for the bet quotes.
Finding a Mortgage: The basics
With hundreds of different mortgage packages on the market it can be difficult finding the perfect one for your needs. It is important to secure a mortgage before you start the searching process to avoid losing out on your ideal property to another buyer in a stronger position. Applying for pre-approval before starting viewings shows the seller that you are a serious buyer and that once an offer has been placed the only thing that remains to do is appraise the house.
There are many different kinds of mortgages but most fall into two categories: fixed rate, or tracker mortgages. A fixed rate mortgage locks you into a rate of interest which remains unchanged for a set period of time. A tracker mortgage begins fixed at a set percentage above or below the Bank of England Base Rate and then tracks the rate and moves up or down depending on the movements of the Bank of England rates. So if you have a mortgage which has a Base Rate plus 1%, and the base rate of interest is 0.5% then you would pay 1.5% interest. Some lenders put you on a tracker rate once your fixed rate time period has expired.
With interest rates falling many tracker mortgages look tempting, but many professionals recommend a fixed rate mortgage instead. Many banks put tracker rates up this summer in anticipation of interest rates falling so even with the decline in Bank of England rates, the mortgage holder won´t necessarily benefit directly. Fixed deals are low at the moment and you also have the added security of knowing they will remain low for years.
It is also worth remembering that price comparison sites don´t all compare the same mortgage providers, so it is important to use multiple sites to find the best offers.
Many financial advisors suggest choosing a longer term mortgage over a shorter plan, even if you are able to make higher payments. Committing yourself to higher repayments is far more dangerous than taking out a 30-year mortgage but accelerating the repayments if you find yourself in a financially secure situation further down the line.
Finding the right property
The way to get the most for your money in London is to keep an open mind and be flexible. Deciding what aspects of a property are "non-negotiables" is essential, however flexibility over location will ensure you find the best value for money in the city. Be aware of any superfluous additions which seduce buyers into paying more, like a well decorated interior or a pristine garden, when these are easy to fix yourself.
Location is everything when buying in South London. Areas which used to be very affordable have all seen major price increases in the last decade, however, there are still some gems to be found. Hounslow, Croydon and Bromley offer good value for money in the city and although they are not as central, they offer great schools and strong transport links into the city.
For more affordable properties consider buying properties close to overground connections or a bus route rather than on a tube line. Property within a 10-minute walk of a tube station tends to be more expensive and if your work is commutable by bus or overground you could save thousands on the property. The website commutefrom.com calculates your commute and can be useful when selecting an area to buy in.
It is worth investigating the council tax bands in the area in which you are thinking of buying. These are easily found on the government website. Visit the Office of National Statistics website to see the crime statistics, population and healthcare provision.
When it comes to viewing properties, take your time. While it´s true that property in London sells quickly, doing your research pays dividends in a city like London. Take a list of questions to ask and make sure you take pictures to jog your memory of the small details later.
- Speak to neighbours to gain knowledge of the area. In South London it pays to knock on the neighbours door and ask them about the area. Most people are cordial and friendly to help someone who could potentially become their neighbour.
- Ask whether the property is listed, has had electrical and plumbing checks recently, has had recent work carried out on the property?
- Look behind furniture for signs of damp.
- Check how old the roof is? Replacing a roof is expensive and depending on the construction materials, only have a life expectancy of around 15-20 years. The same questions are required in regards to the boiler.
- Ask why the owner is selling and if the owner is there talk to them about it – obviously consider what you are going to ask them in advance.
Making an offer
When you´ve found the house for you and all your needs have been met, try and make your offer by the end of the day. Many London sellers remove the property from the market once they have accepted an offer and you don´t want to miss out.
It’s a good idea to decide if you want to or need to negotiate. Make sure you have looked at other properties in the area - you can use our property search to get a good idea of what properties are selling for. If you are a first time buyer and have no chain or have a pre-arranged mortgage, make sure the seller knows this as this puts you in a stronger position and may help you close the deal.
Once the offer has been accepted the mortgage provider will arrange an inspection to be completed on the property. The mortgage provider will only provide a basic valuation but it´s worth paying a little extra to get a full survey completed. You negotiate further if there are any issues, for example plumbing or electrical issues.
Additionally, if anything serious is discovered you are still legally able to back out of the sale.
Conveyancing is just the legal name given to transferring ownership from one person to another. Conveyancers get the answers to the finer questions like what fixtures and fittings are included and the legal boundaries of the property. They pay stamp duty and change the name on the title of the property. If you ask, they will also carry out an environmental assessment and assess flood risk.
You can shop around and compare prices for conveyancers. It is also possible to get a no-sale no-fee arrangement, whereby if the sale falls through you don´t pay.
This process is time consuming. From offer acceptance to completion can more than 6 weeks even without a chain, but when all the paperwork has been completed your conveyancer will inform you that the contracts are ready to be exchanged. Before the contracts are exchanged make sure you have insurance cover and have the deposit ready for payment.
Once the contracts have been exchanged there is usually a period of around two weeks to make necessary arrangements before you can complete and get the keys.
Congratulations! You now have your new home in one of the most desirable cities on the planet. To help alleviate the stress of moving use a respected removal firm from the British Association of Removers and don´t forget to change the name on the utility accounts and take a meter reading on arrival. Then treat yourself to a bottle of wine to celebrate.