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Dealing with home insurance as a first time buyer

 

You’ve secured the mortgage, paid the fees, and you have chosen your dream first home, but the work isn’t over once you move in. After the challenging experience of first time buying, insurance can often take a back seat. Here’s some helpful guidance on choosing home insurance and how it will protect your new investment.

What is home insurance?

Home insurance is often split into two parts – building and contents insurance. Put simply, building cover insures damage to your physical property (the bricks

house floodand mortar) from unfortunate and unforeseen events such as fire, flooding and weather damage. In places which have high risk of weather damage, such as flooding, your choice of insurance providers may be limited and premiums may be more expensive.

Contents insurance covers all of your belongings, from your laptop to your fridge, and protects them from potential theft, loss or damage.

Do I have to have it?

While you pay off your mortgage your home is technically still “borrowed” from your mortgage lender, therefore they will most probably require you to take out building insurance to protect their investment. However, you don’t need to use your mortgage lender to obtain your insurance. Shop around to compare coverage, there are plenty of price comparison sites such as Confused.com that can help guide you.

How much is my home worth?

It’s highly important to get the right type of cover for your home, so giving your insurance company truthful and accurate answers, when they ask you questions, is essential. Your insurance company will most likely ask you the rebuild cost of your home, which means how much it would cost in total to build your home from scratch again. Many people get a surveyor to help calculate this amount; however you can get an accurate estimate by using the Buildings Cost Information Service’s free online calculator.

Contents insurance is slightly easier; you just need to estimate the worth of all of your valuable property. Money Supermarket has a great online calculator to help you calculate the value of your property.

Do I need to update my insurance?

Planning on a fancy extension? Or dreaming of a spectacular loft conversion? You’ll need to have a chat with your insurer as any changes to your home may affect the rebuild cost. If you don’t change your policy to match any changes and you become underinsured, you may be left to pay the extra if anything was to happen to your home.

Are you a recent first time buyer and have any helpful advice on home insurance? Pop your tips in the comments below.

 

Image Credits: Wikimedia

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How to make yourself more attractive to lenders

How to make yourself more attractive to lenders

Getting your first mortgage is an exciting yet daunting journey; many people discover that the road to home ownership is more like climbing a mountain than taking a gentle stroll. With obstacles such as large deposits and rising house prices (to name but a few), we’ve compiled some handy advice on how to make yourself, and your situation, more attractive to lenders.

Check your credit
Your credit report is your financial history; the better your score, the more likely your lender will be to give you a mortgage. Improve your chances by checking your credit rating before you apply. Have you missed any payments in the past? Have you gone into your overdraft recently?

Another issue you need to be aware of is your partner’s or ex-partner’s credit score as this can greatly impact your mortgage application.

You can discuss your credit score with your bank or you can use popular websites such as Credit Expert, which will give you a free credit report if you sign up for a trial.

Register to vote
If you’re not already on the electoral role, get on it! Lenders often check it to ensure that you are being truthful about where you currently live and their decisions can be greatly impacted if you have yet to register. To sign on to the electoral role, or for more information, simply go to Gov UK.

How is your income?
How much you earn is extremely crucial to lenders as they use multiples of your total income (and joint income) to decide on the maximum that they will lend. It isn’t just about having a higher salary; you also need to ensure that you keep all important documents such as benefits letters or payslips (lenders usually ask for at least three to six months’ worth), as these will be analysed during the decision making process. Self-employed? You will need to provide three years’ worth of accounts instead. Have a lower income? There are plenty of schemes that may help you get on the ladder such as the new Help to Buy ISAs.

Stick with your work
Have you had several jobs for the past few years, or are you dreaming or a new career? While going through the mortgage process it’s best to put those plans on hold and stick with your current job (even if you hate it!). Not only do lenders need a regular amount of payslips, it is important for them to see that you are consistent with your income.

Clear your debts
Essentially, with a mortgage, you are about to commit to one of the largest debts of your life. Therefore, it is sensible to try and lose any outstanding debts that you may have. Lenders use any current debts, along with income and outgoings, to provide you with the maximum total that they can offer you. Although this might mean your dream of home ownership has to be pushed back a year or two, it will definitely benefit you in the long term.

 

Have you found that you have struggled to be accepted for a mortgage?  Let us know any other tips you found were useful for making the process a lot easier.

Image CreditWikimedia

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What can first time buyers expect to get for their money?

 

It’s no secret that getting on the first rung of the property ladder can be an extremely difficult task, with many first time buyers struggling to meet the high costs involved with purchasing their first home.

According to Rightmove first time buyers can now expect to pay an average of £169,414 to get their foot on the ladder – that’s an increase of 7.6 per cent on last year’s figures. A recent report by The Independenlondon flats 2t also revealed that unaffordable housing is forcing first time buyers out of the home towns they’ve grown up in and love.

So, what can first time buyers expect to get for their money?

London living

Reports claim that those hoping to buy in the notoriously expensive London need to be earning a whopping £77,000 a year to afford the capital’s average house price of £384,856. However, if the national average of £169,414 is more in your price range, you’re likely to be looking at a one bedroom flat in north London or The Isle of Dogs. The sizes may be “bijou” but many would argue that the lack of space is a small price to pay for the opportunity to live so close to the big city and all it has to offer.

A quiet lifeisle of wight
If you enjoy the open air, a slow pace of living and love the sea, perhaps a house across the Solent may be of interest?  You can buy a spacious three bed semi  in the more rural/coastal parts of the Isle of Wight, offering outside space and with a beach never more than 20 minutes away. You can expect to get a lot more for your money than if you buy around the nearby commuter belt of the south east.

 Go up north
Moving further up north to Cumbria, you could enjoy a three bedroom detached property in areas such as Wigton or Windermere. Prices generally are lower in the north with many areas such as Leeds in Yorkshire or the suburbs of Newcastle offering semi-detached or terraced properties with a garden for the average asking price. However, you may find that prices begin to rise the closer you get to the city centre – notably in the larger cities such as Leeds, where you could possibly purchase a two bedroom apartment for the same price as a house several miles down the road.

 How are you finding prices in your area? Do you plan on buying closer to home, or do you have to look elsewhere for something more affordable?

Image Credit: GeographGeograph

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Top tips for a house buying novice
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Top tips for a house buying novice

We all know the expense of buying your first home, and now more than ever it’s publicised just how much of a struggle it can be to take that first step on the house buying ladder. Whilst saving for a deposit and taking out a mortgage will be the main money worry you associate with the process, there are a number of other costs that you’ll be required to fork out for. If you’re unaware when it comes to some of the ‘hidden costs’, check out our guide below.

Mortgage arrangement and valuation fees

When arranging and applying for a mortgage, there are some additional fees that will be applied on top of your mortgage amount. Arrangement and valuation fees can vary in cost, in most cases being anything from £0 to £2,000. Whilst is can be added onto the overall amount of your mortgage, it will add to the overall amount you owe, whilst also potentially impacting on your interest payments.

Stamp Duty

Whilst Stamp duty has been altered of late, it will still be a major outgoing that you’ll need to budget for when house hunting. Put simply, stamp duty is a lump-sum payment that anyone buying a property or land costing more than a set amount is required to pay. The total amount that you’ll pay varies based on the value and type of property

Survey cost

Upon acceptance of your offer on any home, you’ll now need to have a survey carried out. Costing anything between £400 and £700, a survey can prove to be a costly expenditure, however they are crucial to find out about the condition of the building and, if there are problems, give you leverage for negotiating the buying price down or pulling out of the deal altogether.

Removal costs

Just because you’re moving into your very first home, doesn’t mean that you haven’t got a short lifetime of possessions that you’ll need to transport to your new place. Transporting items on your big day can prove to be a real headache, so if you want to keep fuss to a minimum, hiring a professional, quality removals provider can be one avenue open to you. Shop around, and pick a service well suited to your situational and budgetary needs.

Initial furnishing and decorating costs

Moving into your home should be a fun and exciting time, but one of the most enjoyable aspects of the move comes when you get to put your personal stamp on your new place. Decorating might not be the first thing you choose to do upon arriving, however over the coming months, you’ll need to get your house kitted out and to your liking, meaning you ought to begin budgeting for new furniture and accessories plenty in advance.

Home insurance

You might think that home insurance is something to look into once you’ve arrived at your new property, however it’s crucial that buyers always search out home insurance quotes prior to securing a property. It’s an important step to take early in the process, as it could potentially flag up issues with the property, such as a suspect neighbourhood, or the property being in an area at high risk of flooding. As is often the case when it comes to insurance, make sure that you shop around to make sure that you not only find the most relevant cover for your new property, but also the best price.

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An easy breakdown of the home buying process
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An easy breakdown of the home buying process

The house buying process can be a complicated and hugely time consuming process. If you’re juggling it with your full time jobs and family commitments, it’s not hard to see why people begin to feel the stress. Whilst we can’t lighten the workload for you, we can give you a helping hand when it comes to understanding the whole process. If the strain of starting the home moving process is starting to feel like a burden, here is our simplification of the home buying process.

Get prepared

House buying is a big life decision, so it’s important that you don’t head into the process without doing a reasonable amount of research. Getting an understanding and background knowledge will be a big aid, and make the process of home buying much more straight forward. As with most things, having a greater understanding will allow you to make a more informed decision further down the line.

Find your mortgage

A crucial factor when buying a home is to ensure you get a mortgage that is well suited to your financial situation. Again, this will involve copious amounts of research and homework. If you’re unsure what types of mortgage are out there, it’s worth looking into, and getting the facts straight in your head before going out into the market.

Place your offer

Once you’ve got your mortgage lined up, viewed homes and are now ready to proceed, it’s time to put in an offer on what you want to be your new home. If you’re a first time buyer, you’ll have less constraints, as you won’t have an existing home up for sale slowing you down. Usually, you’ll put your offer in through your estate agent, as they will help your deal go through as smoothly as possible.

Source your solicitor

Now for the legal aspects, you’ll need to get yourself sorted with a solicitor, in order to handle the paperwork surrounding your impending move. It’s important that the finer details of your move are scrutinised ahead of signing your papers, so having a trusted solicitor on your side is an important addition.

Get it surveyed

Another crucial step is to ensure that you arrange for a survey of your new property to be carried out, to make sure that your new home has been thoroughly checked over and is valued at the price you’re paying. There are a number of different surveys and reports which can be carried out, from the cheaper condition report to the most comprehensive option of a structural survey.

Exchange contracts

Once your solicitor and surveyor are happy, it’s time to sign the contract and move ahead with the purchase. It’s at this point you’ll have to start the expenditure, as you’ll usually have to lay down 10% of the total price as a deposit. It’s important to know that once you put down the deposit, you’re committed to the sale, meaning that if circumstances change any you need to pull out of the deal, you’ll likely lose your deposit.

Finalise it

Upon completion, the property finally becomes yours. It’s time for you to get your keys and the deed to your first home. The completion of your purchase means you’ll now have bills to pay; the 90% of your home which you’re yet to pay for is transferred from your mortgage lender to your legal representative, and then on to the seller’s representative.

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Money tips for beginners
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Money tips for beginners

If you’re taking the first steps in the home buying process, finance is one area in which you’ll be needing some guidance. When it comes to money management, we’re no experts – that’s what your bank or financial advisor is for; however what we are capable of doing is pointing you in the right direction – we know just how confusing it can be to get reliable facts and figures. As a first time home buyer, there’s probably no current aspect of your life as important as money. We know that the home buying process is a costly one, and even once you finally secure your dream place, you’re likely to still have jobs to do that will place you under further financial strain. If you’re struggling to wrap your head around finances and just want some tips on keeping your money safe, we’ve got you covered with some basic advice.

Online banking

In the modern day, we all live a hectic life. Gone are the days when you’d need to take a trip to your local branch to check your balance. Nowadays, for the most part, customers like to be able to control their finances at the touch of a button. Most banks now offer services online, however some are easier to navigate than others. Before you jump into your decision, check out the online banking services offered by banks, along with their smartphone apps – as that’s likely to be the quickest way you’ll have of keeping on top of finances.

If you prefer to conduct your banking over the counter at your local branch, then you need to make sure you have regular access. It’s all well and good selecting a bank and opening a current account online, but if you encounter problems and need to speak to someone face to face, you need to make sure you aren’t required to trek miles out of your way.

Check out your bank account features

If you’re just after a standard current account with no frills, then you’ve got hundreds of options to chose from; however many accounts offer at the very least, bonuses and perks to assist your financial situation. It could be something as simple as an interest free overdraft (which not all accounts have) to something more lucrative, like cash back on supermarket and petrol station purchases. If you’re coming off the back of a big house purchase, money won’t be flowing as freely as you’d hope, so an interest free overdraft, just to be utilised whilst money is tight could be a godsend. Shop around and view the overdrafts on offer at different banks and see which best suits your needs

Get the best deal

In an age where there are more different account options than ever before, many banks are now looking to lure you in with deals. Make sure you check out what offers0 you can get before opening an account. Things like cashback accounts now offer to pay you money back on purchases such as groceries and petrol, and other banks even offer you cash to switch to one of their accounts. Make sure you shop around, and take advantage of the deals on offer.

Graduate benefits

If you’re still a student, or are a recent graduate, then there are special accounts still available for you which offer things like overdrafts and freebies. The Young Persons Railcard has always been a popular sweetener for banks when it comes to luring in custom, and things like restaurant discount cards and gadget insurance are also available at banks, as a means of saving you money.

Compare your options

Once you’ve weighed up options and garnered what benefits and drawbacks all the different accounts have, head to a comparison site to compare your options for one last time.

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Top tips to finding your perfect home
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Top tips to finding your perfect home

Buying your first home is a hectic, but exciting time in your life. On one hand, there is nothing like finally taking that prized ownership of your own personal space. On the other hand, it is stressful because in many respects, as buying a home can leave you in a financially tight situation, and provide you with a lot of work. While it isn’t uncommon for homebuyers to make  negotiation errors during the process of buying a home, these mistakes are easily avoidable. If you’re on the hunt for your dream first home, here are out top mistakes that you should avoid.

 

Get it checked

One of the biggest and most serious mistakes that homebuyers can make during the buying process is to opt out of getting a professional to provide a thorough property inspection. When purchasing a home, you’re likely to allocate funds towards remodelling rooms and new furniture. However, without a pre-purchase home inspection, you could find yourself unaware of any number of  structural issues  or deficiencies in the home. You can avoid this issue by hiring a professional to conduct a pre-purchasing home inspection.

 

Pricing

Another common mistake that homebuyers make, especially when purchasing without an estate agent, is that they will easily overpay for a home. While not doing a pre-purchasing home inspection leads to overpaying, so does not reviewing the pricing of homes in the area. Therefore, to make sure you aren’t being overcharged, do some research and review the prices of homes in the area. It will give you an idea of range you should be paying in and give you negotiating power when talking with the seller.

 

Don’t get carried away

Don’t fall into the trap of growing too fond of a property before having a full research and view of properties. Try to stay relatively neutral throughout viewings,  whilst you want to make it clear you have an interest in the home, showing over exuberant enthusiasm for a property during a viewing or the negotiation process can spell trouble. Usually, the seller will notice your feelings and gain the upper hand, which will result in you paying more.

 

Why is it for sale?

One trap that many homebuyers fall into is to not question why the seller has put their home in the market. While in some cases, the seller wants to move elsewhere, it can also be the case that there are other issues. Therefore, in order to protect your investment and add to your negotiating power it is a smart move to ask why the seller has their home on the market.

 

Keep Your Options Open

Sometimes, home sellers notice when a homebuyer is desperate to buy a house. This scenario immediately increases the seller’s power, and reduces your negotiating chances. Also, you do not want to put all your hopes into one home. Thus, when searching through homes, it is best to keep your options open. Look through a number or properties and make a list of your favourites. This will help you keep calm when facing negotiations with a homebuyer and increase the chance that you’ll get the property that you want for a fair price.

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Stamping down on stamp duty
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Stamping down on stamp duty

As you enter the house buying process, you’ll no doubt be tightly managing your finances. With a number of costs and taxes to account for, you could be forgiven for losing track. One recent alteration to the fees you’ll pay when purchasing a new house relates to stamp duty.   In 1997, Gordon Brown revised the stamp duty system in response to rising housing prices as a source of government revenue. Over 15 years later and for much of the same reason, in December 2014, the 1997 system has been revised to become fairer by progressive taxation. So if you are thinking about buying your first home or just an overview of how the new system works, then look no further.

Breakdown:

The good news is that £4,500 is the amount saved on an average price home but how will this system impact on you?

Untitled

As you can see from the image above, for any property up to £125,000 you won’t have to pay a thing; this is very much the same as the previous system. Under the old system you would have been liable to pay 1% on homes between £125,000 – £250,000, whereas the new system 2% is the threshold. However, the current system is a progressive tax where you will only pay a percentage based on the amount you are over any given threshold. This in turn means you’ll be financially better off under this system than the last.

In addition, under the new rate you’ll pay 5% on any property up to £925,000 progressively. The old system would have meant that you’d have paid 3% between £250,000 – £500,000 and & 4% for anything over £500,000. This ensures that anyone buying a home under the £937,000 mark will pay less or the same, treasury figures show.

Paying stamp duty and possible exemption:

Although the system is now a progressive system and is therefore fairer, there are still some ways that you can either reduce paying the tax or not pay it at all.

Paying stamp duty:

It is important to pay stamp duty or a £100 fee could be incurred. Your solicitor usually takes care of this but should you choose to do it yourself, then you need to complete the form and send it off. It is your responsibility to ensure that all documents are completed within the 30 days on completion of a deal.

Think about the band system:

The first thing to do, regardless of the system or not, is to ensure you get the best possible price for the house. This may be the difference from being put in one band to another. For example, if the house was on the market for over £125,000 and you as the buyer was able to get a deal for just under that figure then you wouldn’t be liable to pay anything at all.

Transferring of property:

If you transfer the deeds of your home to someone else, they will not have to pay the stamp duty on the market value of the property. This therefore means you could be eligible to pay less stamp duty if you pass the house over as a gift or leave it in your will.

 

CC image sourced via Google Image free to use search.

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6 unusual ways to save for a house deposit
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6 unusual ways to save for a house deposit

We all know how tough it can be to scrimp and scrape funds together. Whether you’re trying to make every penny count as you try to save for a deposit, or you’re living as a peasant after buying your first home, here are some great quirky ways of making your money go further.

Tin foil behind the radiator

Heating the home over winter is an essential, however if you’re short on funds, make that heat work harder by placing tin foil behind your radiators. It looks a bit weird and as if it should be in a bad sci-fi film, but it does the trick and keeps the warmth in the room.

Returning past purchases!

Jewel-Osco_Monster_Shopping_Cart

Sure, you probably don’t want to hear this one, but have a search through your recent purchases and return any unused or unworn items – it’s highly likely you won’t even miss them when they’re gone.

 

Image Credit: commons.wikimedia.org

 

 

 

Car boot sale!

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 A good old car boot is a greatway to rid yourself of old tat whilst also making a bit of extra pocket money. It won’t shoot you into any rich lists, and you’re likely to regret it when you’re up at 6am traipsing to a muddy field, but car boots are one way to generate spending money when money is tight.

 

Image Credit: www.flickr.com

 

 

 

Write a shopping list!

Thank you for shopping face down

We all know how tough it is to go shopping and stick to a strict list of items we need. Make sure before heading to the supermarket, that you’ve put together a list of necessities! You might stray with a couple of impulse purchases, but otherwise, try to stick to the essentials. Likewise, try to avoid shopping when hungry – that’s always a potential nightmare when it comes to overspending.

 

Image Credit: commons.wikimedia.org

 

 

 

Leave oven open after cooking to heat house

Feel a need to add a quick injection of warmth into your home? Leaving your oven door open after cooking is one way to utilise heat that would otherwise go to waste. The warmth gives your kitchen a quick boost in temperature and can also be used for small jobs such as drying towels.

 

Market your hobby!

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We all have hobbies, and if you’re lucky enough to have perfected yours, then it’s likely you’ll have a marketable skill that you can turn it into a small source of income. If you have a full time job this may be difficult but if you have the free time to put your skills to use, the internet is now a valuable tool for getting your work out there.

 

Image Credit: www.starbizsoln.com

 

 

 

Title image: www.flickr.com

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Top 7 blogs for financial advice
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Top 7 blogs for financial advice

Buying your first home is exciting, but  can be equally as nerve wracking. It is a major decision which requires a lot of research, planning and most importantly; financial budgeting. Once you have raised afunds for your deposit, you may be left struggling financially; however by finding ways to make a little extra money, starting to manage your living expenses more effectively and spending your money more wisely you will soon find a more stable financial footing. Here is our guide to the best blogs on the internet if you’re these helpful hints and tips than from some of the best and most influential finance blogs.

  1. Couple Money (@elle_cm) centres on finding ways to build your finances together as a couple, and aims to educate couples on ways to live on one income whilst having fun with the other! Check out their posts on how to pay off your debt faster, how to build your savings and ways to earn more in the meantime.
  2. Magical Penny (@magicalpenny)  is a personal finance blog which strives to “help you to grow your pennies through conscious spending, automatic saving, and simple, low cost investing”. His posts range from turning your hobby into a money maker, varying house prices, energy comparison shopping and helpful tips when getting a mortgage. It’s definitely a helpful one for a first time home buyer.
  3. Young Adult Money (@davidcarlson1 ) encourages the balance of earning more and spending less, something which can seem like an impossible task. Again this is one to help those of you in your 20s and 30s, with the blog covering topics as diverse as real estate, making more money, cutting expenses and even travel. This blog should be the go to guide for all financial savvy young adults.
  4. Help me to save (@karenbryan) is a blog devoted to helping you spend less, save money and enjoy life. Not only is there advice offered on money saving tips, but posts also focus on providing helpful ideas for making money and ways of managing your living expenses more effectively.
  5. Master the Art of Saving (@MasterTAOSaving) is a blog written for those who want financial tips written in an everyday conversational style. Created by Jen Perkins, the site states outright that it is not a professional financial service, but is a source for easy to read tips and advice. Although it is American, it has a readership that far exceeds that nation, and the tips and advice can easily be applied to UK home owners looking for financial tips.
  6. Young and Thrifty (@youngandthrifty) Kyle and Justin created Young and Thrifty when they left University after having beaten student financial issues. Having then been faced with new financial challenges as young adults such as making investments and getting a mortgage, they have turned to blogging to offer tips from their experience. They now cover all bases on the key issues for first time buyers such as investing, banking, taxes, real estate, and ways to monitor your day-to-day spending habits.
  7. Phillip Taylor Money (@PTMoney) is all about finding ways to build wealth, spend money wisely and make extra income. This blog will help you to discover the best rates when it comes to credit cards, bank accounts and even mortgages. Phillip gives his top tips on saving money, spending wisely and making extra money a read to stay financially secure and savvy.

Have we missed off your go-to blog when you’re looking for sound financial advice? If so, make sure you drop us a comment below.

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