5 Common Home Buying Mistakes And How To Avoid Them

March is traditionally the busiest month for home buying, according to research from Rightmove.

In this competitive market, it’s particularly important to be well prepared and to put yourself in the best possible position to buy.

Anna Green is a Mortgage Adviser at Progeny. As a mortgage adviser, she sees many of the same house-buying mistakes arise time and again and part of her job is to help people sidestep these.

Here are five common mistakes that prospective home buyers make and her tips on how you can avoid them.

1. Not having a mortgage in principle

This is the cardinal sin as far as any mortgage adviser is concerned! Decisions in principle are valid for up to three months with some lenders, so I would always advise getting a decision in principle as soon as you decide you want to buy a property. Not getting a mortgage in principle sorted is a common blind spot that can lead to prospective buyers losing their dream house as they will be required by most estate agents to show a decision in principle for an estate agent to take a property off the market. Having the correct documents prepared and ready to go is one area you can have control over in an often unpredictable process.

2. Waiting for the right time in the market

Essentially, there is never a ‘right’ time in the market to buy a house. The property market is notoriously changeable and it fluctuates so much that buyers can often find themselves frozen by indecision and scared of making the ‘wrong’ move. Recently, mortgage rates have been historically low but the accompanying demand for property has been driving prices upwards and reducing any ability to negotiate. According to the property professionals’ body Propertymark, there were just 20 homes available on average per UK estate agency branch by November 2021, the lowest figure in records going back two decades. Therefore, the best time to buy a house can only be when it makes sense for you personally and financially.

3. Taking out a loan or car finance agreement before your mortgage application

If you’re about to get a mortgage, then now is not a good time to enter into a personal loan or car financing agreement, if possible. Taking on debt outside of a mortgage has a negative effect on your debt-to-income ratio, which essentially looks at how much debt you have in relation to what you earn and could impact how a lender rates your affordability. You may also see an initial drop in your credit score because there is no payment history associated with the loan as yet. As such, and given that moving into a new home often comes with quite a few additional expenses that you may not have budgeted for, it is wise to allow your finances to settle before committing to further expenditure.

4. Buying below budget

Sometimes people buy a house below their budget with a plan to upsize in a few years’ time. This might be the right move for some but buyers should be aware of the potential consequences that come with this decision. There are so many costs associated with buying and selling a property and could potentially be dead money, compared to investing in a larger property, that may last you longer. In buying small with a view to upsizing, there is also the risk that you may get priced out of the property bracket above, if house prices continue to steadily rise. Although the cheaper house you buy will also increase in value, the same percentage increase represents less actual money. If you are relying solely on equity in your home to fund your next move, you therefore risk it not being sufficient to bridge the difference between the sale of your current property and buying that bigger next home.

5. Relying on advice from family and friends

Unless your family or friends have bought a house very recently, then chances are they have bought in a completely different market. As an example, so many clients come to me wanting a shorter-term mortgage because that’s what their parents did 20 years ago and have advised them to do the same. However, the market is entirely different now, not to mention the individual circumstances of each individual buyer or buyers. In this example, prices are so much higher now and the corresponding mortgage over a shorter term may just not be affordable, so you need to consider the most suitable options for your circumstances.

By speaking to a professional mortgage adviser, you’ll ensure you receive expert and impartial advice, based on your needs, current market conditions and products. We help buyers understand the true cost of a mortgage, which is not just about rates but also encompasses fees and other product features, such as early redemption charges, overpayment facilities and portability.

So far in 2022, the housing market shows no signs of slowing, with Rightmove reporting its busiest ever January for those wanting to move home. Anyone looking to buy should ensure they do their research and enlist the help of professionals to help give themselves the best chance of moving into their dream home in the year ahead.

This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
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