Buying a home is both exciting and daunting, with a plethora of important decisions to be made. From getting the best mortgage to choosing the right location, buying a home can be stressful. Seeking property advice is always a good idea, but some information – although it may seem legitimate – isn’t always best heeded.
Now, property experts from MyLocalMortgage have busted common home buying myths, along with the reasons behind them.
“Buying a flat is a bad investment”
This is a common myth that can be disheartening, especially if a flat is at the top of your budget.
One of the reasons people often say this is because buying a house is usually freehold which means you own the property outright for an indefinite period.
Meanwhile, flats or apartments are usually leasehold which means you own the property for a specific period only.
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“The property’s asking price is the price you will pay”
In some markets, this could be true but in England and Wales it’s more likely that people will offer below the asking price or negotiate a good deal.
Buyers can potentially save thousands on properties if they offer lower than what the house is listed for.
In Scotland, the process is slightly different where properties can be advertised at a “fixed price”.
This means the property will be sold to the first person to offer that price and is more often than not “first come, first served”.
Furthermore, if a property is advertised as “offers over” a certain price, to make an offer, your solicitor will note your interest.
When the seller has received your interest, they may put a closing date in place for you to make an offer.
If a property has “guide price” advertised, then your solicitor will advise you on the best price to pay.
The seller will either accept your offer or set a closing date to find their best offer.
“Your budget is set by the size of your mortgage”
Once you have a mortgage agreement in principle (AIP), you can start looking for your a property.
With this in place, your lender has agreed to give you a certain amount of money.
However, this doesn’t mean you have to spend it all.
Mortgages can also be used to cover home improvements, so if you can only afford to buy a fixer-upper, it’s a good idea to set your buying budget as less than your full mortgage amount.
“Get the biggest mortgage you can afford”
According to the experts, this is slightly outdated advice that goes bad to when house prices were increasing rapidly.
This was also advised at a time when getting on the ladder meant your investment would grow considerably in the next few years, along with your wages so it wouldn’t seem too much of a stretch in a few years down the line.
Wages do not always increase in line with inflation so taking on a big mortgage can be a risk.
If a recession hits and you’ve got a large mortgage, you could be left with negative equity.
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