Friday, 20 May 2016

Buying a house: The things you don't know - Part 1


Last month we did a post on advice for first time buyers which you can read here.
Within in it we mentioned a lot of things that we actually had no idea about before we started house hunting so we thought it would be a good idea to offer up some more advice about all the things that come alongside buying a house that you may not really know about.

Valuations / Surveys / Homebuyers Reports

We were always aware that you needed to have a survey when buying a house but what we weren't aware of was all the different types available. Basically you have to have a mortgage valuation done no matter what as this satisfies your lender that the property you're buying is the right price. You usually have to pay for this but some mortgage lenders offer them free with their mortgage (ours did).

A mortgage valuation does not point out any problems with the property. To find out any problems, repairs, etc you have to pay for a different kind of survey. Enter the report. We highly recommend having something other than a basic valuation carried out on the property you're buying, we upgraded to a RICS HomeBuyer Report. This type of report is the best for most houses that are in OK or above condition. The HomeBuyer's identifies any structural problems and problems inside and outside the house. This is really good as it means if there's a lot of expensive work that needs doing you can negotiate on price but it also lets you know what needs sorting out.

Mortgage protection / Income protection

You know those adverts for PPI? Well that's kinda like this stuff. Don't let that put you off though, let us explain further...

We're going to guess whether you use an independent financial advisor or whether you use a banks mortgage advisor the word 'protection' will be bandied about like it's going out of fashion. It was for us. We even left one meeting totally and utterly confused when it came to what protection actually is. We're here to save you that confusion.

Mortgage payment protection insurance (MPPI) covers your mortgage payments if you can't pay because of unemployment, sickness or an accident. You pay a monthly amount to receive this cover and should you ever need to use it, it will usually only pay out for 12 months.

Income protection pay out if you can't work because of an accident or sickness. Unlike mortgage protection it doesn't generally cover you for unemployment. You're generally paid between 50% and 70% of your earnings.

So do you need both products? We're not here to tell you what's best for you but we advise that you think long and hard about what's best for you. In our case we didn't think both protection policies were necessary. We will say though you should definitely have one of these forms of protection, it's not a wise idea to have neither. You may never need them, which is good,but it's really not worth the gamble as in the long run you could lose your house.

Council tax

Again council tax is one of those things we were aware of but didn't fully understand the ins and outs of. Every house falls under a council tax band ranging from the cheapest (A-) to the most expensive (H) so that's a total of 9 different bands your house could fall under. You can check which council tax band a property you are looking at falls under here, as long as you know the postcode and house number. It's actually pretty useful to check the council tax band of any properties you're interested in, especially if you're going to be on a strict budget for monthly payments.

You are sent a bill in March (just before the start of the new financial year), the bill is for the year ahead. For example a bill received in March 2016 is for April 2016 - March 2017.

You can pay council tax bills over 10 or 12 months. My local council assumes you want to pay over 10 so if you want to change it to 12 you have to phone up so it's definitely worth seeing what your local council's policy is so you can correctly budget.

Join us next week for advice on water meters vs rateable value bills, using an independent mortgage advisor and solicitor's fees.

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