First-Time Buyers

• FORUM
• Email this
  to a friend
  

There are just some things in life that are a recipe for disaster and going shopping without money in your pocket is one of them. You are almost guaranteed to find something to buy that you absolutely fall in love with: Shoes, clothing, handbags, sportswear, cars, gadgets and whatever else manages to get your greed-glands working overtime!

So why, oh why, would we put ourselves through this same kind of masochistic torture when buying our dream home? It's madness enough when buying "small ticket" items but a house (or flat), are we really that crazy? Well, yes. We still do it. "FTB Excitement" takes over the very best of us.

But it doesn't take much for the euphoria to disappear and to make way for something else. You see, the First-Time Buyer (FTB) is just so excited at the prospect of owning a little piece of land and home to call their own. Unlike the seasoned, more cynical, home buyer, it understandably takes fewer viewings for a FTB to lay eyes on the place that is "the one for them". They just know it. They can see it, feel it, touch it, taste it.

Nevertheless, you can still guess what the FTB has gone and done, can't you? Oh yes, they've committed mortal home-buying sin number one:

"Thou shalt not go looking for a home until you have a Mortgage in Principle because you WILL fall in love with something. GUARANTEED!"

And that is when the "Curse of the First-Time Buyer" descends upon them! That property, their dream home for £165,500, has been sent to test them. Lenders have all stood around their moneypots and decreed not to lend them any more than £150,000. Oh yes ... the curse has fallen upon another unsuspecting FTB!

As bizarre as all of this sounds, there really is no need for any First-Time Buyer to put themselves through the pain and torment of finding a house or flat that they love without having the money in their pocket first. (Or as close as you can be to having the money that is.)

Have a mortgage agreed in principle before you start your house-finding journey. Get it in writing. Get a bank, building society or mortgage adviser to produce a Key Facts Illustratration (KFI) for you. Using one of those "How much can I borrow?" website forms is insufficient. Asking for just your annual salary and the property's value is literally scratching the surface. You need something far stronger than that to bargain with.

And there's no need to worry : you're not making a full-blown application for a mortgage. That's why it's called "Key Facts" because it's only the information that both you and the lender need to know at this stage in your relationship.

According to the FSA's "Mortgage Conduct of Business" book, this is how you can avoid the "FTB Curse". (Well, they don't quite mention the curse but you know what we mean!)

"The principle [of providing an Illustration] is that the customer should make an informed decision to apply for a regulated mortgage contract. This means that he must be given sufficient information, specific to his case, to be able to make that decision."

If you or someone you know are seriously in the marketplace for your first home, then go and get your illustration now. They can be produced quickly enough by a reputable adviser. More than anything else, though, you know you are in the strongest possible position to negotiate with the Seller. You've gone shopping with money in your pocket!

- Mark Matheson MSc