If you’re considering taking advantage of the current record-low mortgage rates to buy a second property, now could well be the time to do it. Indeed, there are several reasons why it might be a prudent move to purchase a second property, whether that’s through boosting your income via buy-to-let property investment or having all year round access to a holiday home for when you need to unwind. Regardless of your reasons, there are plenty of hurdles and pitfalls waiting to make the process far less smooth than you’d like. Swerve them with these; our 4 IDEAL steps to buying a second property.
REMORTGAGE YOUR FIRST TO BUY YOUR SECOND
Initially, you should consider all of the financing options out there to help you purchase that much sought after second property. Unless you’ve saved enough through savvy investments and thrifty budgeting, perhaps the most straightforward route is by taking out a remortgage on your first property in order to purchase the second one. This is a realistic option if your current home has built-up enough equity over the duration of your residency there. You can establish estimated costs involved for a remortgage on sites such as habito.com. As initial budgeting is crucial for such a huge commitment, and it’s hard to put the brakes on once the wheels are in motion, it’s best to first evaluate all the relevant costs involved prior to entering into any process.
BE AWARE OF ADDED COSTS
Depending on what you require from your potential purchase, you’ll first need to create a realistic budget to determine if you can actually afford that second property. Vital in the budgeting process is to face up to the fact that added costs will be coming at you from all angles; because the insurance and property tax on a second home is usually somewhat higher than your first property, you’ll need to be strict with your budget and face up to any outstanding debts you may have. Furthermore, you’ll also need significant savings in place for a down payment on the remortgage and your income will need to be high enough to cover the payments on both properties as this will ultimately determine your chances of approval.
CONSIDER THE HELP OF A REALTOR
House hunting is made simple (relatively speaking, of course) with the help of a real estate agent who is both experienced in – and local to – the area in which you’re hoping to buy. Rather than struggling on your own (akin to scrambling around in the dark), a realtor will be able to illuminate your options, and shorten the list of appropriate homes within your budget and requirements. Contrary to popular belief, deciding against enlisting the help of a professional will almost certainly not save you money as the seller is responsible for the realtor’s commission, not the buyer.
RESIST THE URGE TO BUY ON IMPULSE
While many of us dream of the luxury of that second property, and as such rush into decisions in order to get the deal done swiftly, purchasing on impulse is certainly best avoided. As with your first home, you’ll need to take careful consideration when determining what your second one requires and what you want out of it.
While the seller is most often interested in selling the property as fast as possible, and will perhaps try to lubricate such speed by offering discounts, it’s important to assess each aspect of the property thoroughly and determine if you’re truly able to afford it. Even though it’s not entirely common to be able to barter with sellers, in some situations you may be able to negotiate the asking price. Don’t rely on this eventuality however; it’s best to view properties that are within your price range from the get go, to avoid disappointment.