What are the most common first-time buyer mistakes and how do you avoid them?

Buying a house is a huge deal. More than likely, it will be the biggest purchase in your lifetime. Sweeping you up in a rollercoaster of emotions from elated and excited, to anxious, stressed and ultimately, a little overwhelmed.

It’s impossible to know all the complexities first-time around, the process is a lengthy one and tricky to navigate alone. Picking through the layers of legal jargon, paperwork and professional terms is hard enough.

It’s easy to see why many first-time buyers make the same common mistakes.

This guide aims to simplify the process, taking you through some of the key stages and common mistakes that come up time and again, so you can avoid making them.

Here are seven common mistakes first-time homebuyers should avoid…

1. Not having enough of a deposit

Back in 1960, the average first-time buyer was 23 years old, paying a £595 deposit on their first home – the equivalent of around £12,738 today.

Last year, The Independent reported most first-time buyers are 30 years or older before they get on the property ladder, having to pay a deposit of around £20,622.

A lot has changed!

There are a few things to bear in mind…

Using all of your savings for the deposit could be the biggest mistake of all. Often people go all in with a large down payment.

On the face of it, this makes sense, as you won’t have to pay as much back.

However, it’s worth considering a little extra on the mortgage and holding some savings back for rainy days. Particularly in the beginning as you get used to the increased outgoings that go hand in hand with owning a property.

Remember, as a homeowner you never know what might crop up – broken boilers, leaky roofs, blocked drains etc. It’s down to you to have these fixed.

If you’re struggling to save by yourself, there are alternatives which may help.

2. Not considering ALL the Costs

You may have an idea about the costs of the monthly mortgage repayments, but there’s a lot more to it than that.

Have you considered the other monthly outgoings?

These are just some of the costs first-time homebuyers often overlook.

Also, it’s worth remembering, utility bills and insurances are liable to increase over time and this should be factored in.

Spend time upfront working out the potential outgoings, to ensure you can comfortably cover all the costs before committing.

3. Misunderstanding what you can afford to borrow

Don’t overstretch! You may be able to afford a more expensive house, with larger monthly repayments, but consider how this will impact your quality of living.

Finding out how much you can afford to borrow is a crucial step. When you apply for a mortgage the lender assesses affordability by looking at a number of factors.

These will include:

If you’re buying a property with someone else, the lender will also take their finances into consideration.

4. Not performing a DIP before you search

It’s much more fun to start searching for a new home straight away, but it won’t help you in the long run.

Buying a house is a huge investment and the biggest purchase you’ll ever make. It’s better to base this around a sound financial decision, equipped with all the facts.

Start by getting an ‘Agreement in Principle’ (AIP), also known as a ‘Mortgage Promise’ or Decision in Principle (DIP), from a lender before you begin viewing any properties.

In theory, this demonstrates you can afford to buy a property and potentially puts you in a stronger position, highlighting you as a more attractive buyer.

Most lenders will carry out a hard credit check for this – which then appears on your credit score.

A few lenders will run soft checks which won’t affect this. It’s a good idea to bear this in mind and check with each lender you contact before applying.

Your offer should last between 30 and 90 days. But keep in mind that it’s only an estimate and not a guaranteed mortgage offer.

5. Not seeking advice

You’re new to the property market and the house buying game and going it alone is not advisable.

Mortgage deals are a minefield with various fees, term lengths and rates to get your head around.

Along the way a number of professionals will have a role to play in your journey and it’s important to have people you can trust to guide and help steer you through the sale.

A good broker will be able to offer independent advice, recommending a deal that’s right for you laying out everything in black and white.

Shop about, ask family and friends for referrals and make sure you trust the professionals before instructing them in your sale.

6. Don’t forget the other costs

There’s more to consider than the cost of the property when purchasing your first home. Often the additional fees involved are overlooked, which could potentially leave you short.

It’s a good idea to plan and budget for each stage to prepare for what’s to come.

This list covers the standard fees involved…

7. Failing to do your research and identify your needs

Before you register with estate agents or start your search online, decide what your priorities are and what’s important in your new home.

It’s easier to make a good decision if you’ve highlighted your needs and are clear about what you’re looking for.

Do your homework!

Even if you’ve lived in the area you intend to buy in, you’ve not looked at it from an investment point before.

Research what other local properties have sold for using sites like Zoopla or On the Market. If it’s a new area check out the town, visit at different times of the day.

Look out for signs of improvement and check with the local council for planning permission in the area to see what’s in development.

Don’t fall for the ‘best house’ on the ‘worst street’ – location is key to a property holding its value. And don’t discount an area before you’ve done the research. You could be investing in the next hot spot and stand to make a tidy profit.