Renting or Buying - What Is Right for Me?

Renting or buying – it’s an all-too-common question. Choosing to buy an apartment or house is a major financial decision, so it couldn’t be more important to get your choice right. Here, you’ll find out more about whether you’d be better off buying or renting a property.

What Are the Benefits of Buying?

When weighing up the advantages and disadvantages of purchasing a home, you need to consider the following:

• After paying off the mortgage, you’ll never need to worry again about having to pay for your home – it will belong to you.
• If your property goes up in value, it’s possible to use the equity to purchase a larger property or put it towards an even more comfortable retirement.
• You’ll be able to improve the property and increase its value with no need to ask your landlord first.
• In some cases, it’s actually cheaper to purchase than to rent.

What Are the Disadvantages of Buying?

Although there are several positives, there are some downsides to consider when it comes to buying a home, including:

• It’s a major commitment, so you’ll have to be certain you’re able to afford the ongoing financial responsibility.
• If interest rates go up, so will your repayments, so you’ll need to be prepared for such an eventuality.
• It isn’t always easy to sell a property.
• You’ll need to pay all your maintenance costs, so you’ll have to be sure you can afford to pay them.
• Stretching your budget too far when buying could leave you without any extra leftover to enjoy your life.
• If you live with a partner and then separate, you’ll need to decide what happens to the property, which can be expensive and complicated.
• If the property’s value goes down, you may find you can’t sell if your home is worth less than the amount you owe to the mortgage lender.
• You’ll have far less flexibility. Selling and moving are a lot more costly since you’ll need to pay legal fees and estate agency bills.
• If you purchase a leasehold property, you may have to pay more in-service charges on top of your mortgage.

Affording a Home

If you’re keen to buy a home, you’ll first need to determine whether or not you’re able to afford it. Remember there are lots of things to pay for, including:

• A deposit
• /The cost of surveys
• Stamp Duty
• Legal costs
• Removal costs
• Monthly bills

Obviously, all of these costs mount up. While there are still some costs to pay associated with renting, including paying a deposit, removal costs and, in some cases, utility bills, they are generally far lower than the costs associated with purchasing a home.

Getting Government Help

If you’re keen to buy but don’t think you can afford to put down a deposit, you may be surprised to learn that the government has put several housing schemes in place to offer assistance. First time buyers, key workers and people on low incomes can often benefit from these schemes if they’re ready to commit to making a purchase.

If you are ready to purchase your next home, we can give you a free conveyancing quote in under a minute, saving you time and money.

What Happens on Moving Day?

Also known as completion day, moving day is an exciting time for buyers and sellers. There’s lots of commotion and packing leading up to it, and then everything seems to happen in a whirlwind. But what happens on moving day itself? When do you get the keys? Will the seller still be there? We know you have questions, so we’ll tick off each point below.

Before the moving day

You’ll have agreed on the actual date and time in advance, it can't be a Saturday or Sunday because the banks are closed; most people pick a Friday. It might seem obvious, but for the completion day of a house sale, the seller will need to have moved out of the property. The target time to move out by is usually 12pm, but this can change depending on how big the property chain is. Alternative times and arrangements can be made if both the buyer and seller agree to them, but it does mean that the seller must be totally moved out of the property by whatever time is agreed.

Anything they leave behind should have been agreed to on a fittings and contents form. If you’re worried they’re going to leave items behind that will be inconvenient or costly to dispose of, you should do an inspection on the day. We suggest you organise to be at the property on the day of completion before your solicitor completes with the seller - you will see very clearly if the seller is ready to move or not. If the seller isn't ready, inform your solicitor and they will hold off formally completing with the seller's solicitor until the seller removes their personal possessions from the property. If the seller doesn't do this then they face the costs of failing to complete.

On moving day

Completion day happens in stages, which usually go as follows:

• You pay the remaining money to the seller’s conveyancer for the house. This is done in the morning, and your conveyancer will let you know when it’s completed.
• You’ve not legally completed it until the seller’s conveyancer receives the payment, and they’ll let your conveyancer know when that’s happened.
• The seller’s conveyancer will let the estate agent know to give you the keys and the agent will call you.
• Both conveyancers will make confirmation calls to let their clients know the sale is finished.
• The seller leaves the property with their belongings by the agreed date/time and the buyer moves in from then

What can go wrong

If the money is delayed, you can’t actually complete it. The contract will provide for what the parties should do if the funds are later than the agreed time, because it does happen. If it’s just a bit late, completion can still take place on that day, but if it arrives too late, it may be that completion doesn’t happen until the following day, in which case everyone has to make other arrangements. This might mean your removal company putting your belongings into storage and you staying somewhere else, such as in a hotel.

Also, the moving company you (or the seller) use may not turn up. If this looks to be the case, let the estate agent know immediately and make other arrangements. For both parties, it’s a good idea to have alternative arrangements available, like a last-minute van hire and overnight bag. The contracts will detail who is responsible for any costs incurred by a delayed completion, so talk to your conveyancer if this happens. (Don’t have a conveyancer? We can help.)

Moving day checklist

1. Don’t stay up late the night before. Get plenty of sleep and wear comfy clothes for the move.
2. Keep your mobile charged and nearby at all times. Have a portable battery pack or charger to hand.
3. Get a childminder or dog sitter for the day – you won’t want them underfoot.
4. Inspect the space you’re leaving for any forgotten items. Remember to document the condition of your home now and the new one you’ve bought on arrival.
5. Have cash to hand for tips and food delivery. You won’t want to cook today.
6. Have a suitcase of essentials and bring it in the cab with you. Think loo roll, soap, towel, sheets, toothbrush, etc. Assume you won’t find these things if they’re in with everything else.
7. Greet the removal team and let them know how you have labelled and organised things. This will help them unload quicker. Remember, they are people who get tired, hungry, and thirsty, just like you. Be a good host.
8. Keep your moving paperwork separate from other important papers. You may need to reference the fittings and contents form if something is left at the property by the seller that shouldn’t have been.
9. Don’t pack expensive jewellery, birth certificates or other valuables. Keep them with you at all times in your essentials suitcase.
10. Do a last-minute clean of your vacant property and lock it up tight. Check every door and window (document this if you’re worried about your security deposit).
11. Before unpacking in your new home, do a quick clean. You won’t see it in this condition again until you move out, so clear any baseboard scuffs or grime-smeared cabinets now.
12. Wait to meet the neighbours. You’re probably tired and a bit dirty. Now is not the time to make a good first impression. Instead, put away what you can, order some takeaway and watch Netflix on your phone till you fall asleep on the couch. Tomorrow is another day.

It’s hard to think of everything if you don’t make a list, so start with our guidance and create your own moving day checklist. Oh, and if you need expert conveyancing help for your next moving day, get quotes from local conveyancers in minutes here.

How Does a Mortgage Actually Work?

You probably understand the basic idea of a mortgage; you go to a bank, they look at your finances, and then they agree (or don’t) to give you some money for a house – and you pay them dearly for the privilege. But how does a mortgage actually work? What’s the process of getting one, and how long does it take? We’ll answer all your burning mortgage questions below.

What is a mortgage?

Taken literally, it means ‘death contract’, and you’ll probably have one for most of your adult life. According to Helgi Library, “a mortgage loan is a loan secured by real property through the use of a mortgage note. The word mortgage is a French Law term meaning "death contract", meaning that the pledge ends (dies) when either the obligation is fulfilled, or the property is taken through foreclosure.” So, if you don’t keep up your payment terms, they will take possession of your property to repay the deal. (The banks really have great terms in these deals, don’t they?) Your job is to pay your principal (the amount you originally borrowed) plus interest (their fee for lending to you), taxes, and any insurance (PITI).

In order to get a mortgage, you need to have good credit and be able to afford the repayments. A good rule of thumb is that you can borrow up to 4.5x your household income. However, debts or other financial commitments will reduce this amount. It’s a good idea to pay off all debts and avoid taking out any new loans in the 6 months prior to applying for a mortgage or principal agreement. According to Which?, “an agreement in principle, also known as a 'decision in principle', a 'mortgage promise' or a 'mortgage in principle', is a certificate or statement from a lender to say that, ‘in principle’, they would lend you a certain amount.” Getting one of these can really help you with your house hunting, and make mortgage approval more likely when you’ve found a home you like.

What are the mortgage terms and how long for?

Most people get a 25-year mortgage, but you could get a much longer or shorter one depending on your circumstances. You may want a shorter one if you’ve put down a very large deposit and didn’t have a large LTV ratio. This will allow you to pay it off quicker and own your home outright faster. In terms of how much you’ll pay to borrow, Money Advice Service suggests “3.99% for a 2-year fixed-rate 95% loan to value (LTV) mortgage, 1.49% for a 2-year fixed-rate 75% LTV mortgage, 1.70% for a 3-year fixed-rate 75% LTV mortgage, and 4.33% for a Standard Variable Rate.” Remember that, no matter how long or short your mortgage term, your home can be repossessed by the bank if you miss your payments. It’s very important you get lending that you can afford in the long term, and that you take out insurance against worst-case scenarios so you don’t lose your home.

How long does it take to get a mortgage?

The time from application to decision varies from lender to lender. The best estimate is around a month. This is because there is a lot of documentation to review and factors to consider before the bank agrees to lend to you. Because it takes between 20-40 days, you’ll want to make sure every document you provide is exactly what the lender asked for. Any inaccurate or missing information can delay your offer. Oh, and getting a mortgage in principle is not a guarantee that you’ll get the full mortgage. However, it can speed up the process, as some of your checks will already be on file.

You will need:

• 3 months of pay slips, bank statements, last P60 and/or self-assessment returns (if self-employed) to verify your earnings.
• Details of your outgoings, including childcare costs, so the broker can assess your financial commitments.
• Proof of ID and current address. Being on the electoral roll helps.
• Proof of deposit (a gift from parents needs to be backed up with their bank statement and a letter confirming it is a gift).
• Details of your solicitor who’ll carry out the transaction.
• Details of the estate agent you are buying through.

How do you port a mortgage?

Some lenders may allow you to take your existing mortgage with you to a new property. While this is convenient, you need to be aware of the potential downsides.

1. You’re reapplying, so if your circumstances or the lender’s criteria have changed, you may not be eligible anymore.
2. If your new home is more valuable, you’ll need to borrow more. That might not be possible, or you could end up with 2 mortgages.
3. You’re not shopping around, so you may end up with a higher interest rate.

If you decide not to port, make sure you won’t be on the hook for an exit fee or early repayment charge. Remember, your new loan will come with new valuation and prep charges that would have already been paid under your old mortgage. You may decide instead to re-mortgage for a better deal.

How do you re-mortgage?

Regardless of whether or not you’re moving, it’s a great idea to re-mortgage whenever your fixed term rates are due to end. This is to prevent you from paying over the odds and give you the opportunity to save if your home’s value has increased, your credit is better, or you’re making more money. To apply, do the following:

1. Get all your paperwork together and review your current terms.
2. Talk to a mortgage broker to get comparison quotes and give your current lender a chance to match them.
3. Review all the terms (and any extra fees) to make sure they are more favourable.
4. Apply for the mortgage with the best terms.
5. Use our free conveyancer search to help you make the switch to a new provider.

And that’s it! Not too stressful when you make use of great online tools like virtual mortgage brokers and online conveyancing platforms.