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6 Budget Planning Tips for First Time Buyers in Chelmsford

FTB

Working to get your foot on the property ladder in Chelmsford is no easy task, but with a market that has seen a slow down, now could be the perfect time to buy your first home. There’s a lot to consider, like which area to choose and what type of property to buy, but above all else, your budget should be your top consideration. The last thing you want to do is to purchase something beyond your means and end up in a financial crisis. 

If you’ve seriously started considering buying your first property, you should also be considering how you can afford it, so here are the best six budget planning tips for first-time buyers from Essex Homes And Lettings. 

1. Stop renting

Paying rent every month is almost equal to paying monthly mortgage fees except you’re not gaining anything! It can be especially difficult to save a deposit for your new home if you’re paying so much each month in rent. If you are willing to give up your own space for roughly six to 12 months whilst you save your money, you are then likely to have enough for a deposit and be a homeowner much sooner than if you were trying to save money and pay rent. Moving back home with family may sound like a last resort, but you will be able to save a lot more. 

If moving in with family is not an option and you must rent, there are ways to work around this so you can still pocket some money for a deposit. You can always find a cheaper place to live, but bear in mind that this may mean a smaller property. You could also consider opting for a house share rather than renting a property of your own to help lower the cost of your rent, giving you extra money to put away for a deposit. 

2. Put your savings to work

Why have money just sitting in an account when you could be earning money on that savings? If you have a decent interest rate, you can reach your savings goal faster, but picking the right account is dependent on how you’re saving. If you have money to put aside each month and want to set up regular payments, a regular savings account might be your best bet. If you need more flexibility with the amount you put away, for example, if you save in lump sums whenever you can rather than on a fixed schedule, an instant access savings account might be the better option for you. 

3. Research areas and locations

As a first time buyer, deciding where to buy your first home is just as important as saving for your deposit. If you haven’t picked the area you want to purchase your new home in yet, do some research to find out what you can afford and if the area fits your lifestyle and needs. You can speak to our expert team here at Essex Homes And Lettings to help guide your choice, but ultimately you will need to determine which areas are good for your budget before anything else. Be sure to check out what the prices are for the type of property you want to buy, as well as council taxes and any other costs that need to be factored in such as travel or parking fees for example. Once you have an idea of what the cost of your property will be, both when purchasing and when actually living there, you can start to properly budget to save for a specific goal.

4. Budget for your monthly mortgage payments

Getting a mortgage means you will be required to pay a monthly amount to your lender to cover the amount you have borrowed, so it’s vital you speak to a lender or financial adviser to ensure affordability. Here at Essex Homes And Lettings we will be delighted to assist or recommend a financial services professional – simply ask us for details.

5. Budget for other home-buying costs

There are more costs to consider once you’ve bought your home, so you should make sure your budgeting plan includes enough to take care of these after you’ve completed on your first property. You don’t want to end up in a situation where you’re strapped for cash and are barely making your mortgage payments. These other costs can include:

  • Solicitor fees
  • Survey costs
  • Mortgage arrangement costs
  • Estate agent fees
  • Buildings and contents insurance 
  • Furniture and decorating requirements
  • Necessary renovations or maintenance 

6. Take advantage of the Help to Buy scheme

The government offers a Help to Buy equity loan scheme to first time buyers in England on properties that are new builds worth up to £600,000. It’s great for first time buyers who only have a 5% deposit saved up because it gives you an equity loan that can be used towards purchasing a house on a repayment basis, rather than on an interest only basis. The repayment plan is interest-free for five years, giving you time to save more money. You can apply if you’re over the age of 18, and the equity loan you receive depends on where you live, so do check with your lender for more information.

We hope you find these six first time buyer budgeting tips helpful. For further no-obligation expert advice please contact the team at Essex Homes And Lettings on 01245398466 and we will be delighted to assist you.

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The housing market is playing ‘a major part in building and sustaining an economic recovery’

economic

The important contribution that the housing market makes to the UK economy should not be underestimated.

While there is no single source of data providing comprehensive information about the total economic impact of a housing transaction, fresh analysis from Knight Frank, produced in partnership with the Home Builders Federation (HBF), attempts to quantify that figure.

It shows that for every resales housing transaction that takes place the economy benefits by around £9,559 on average. Scaling that figure up means that for every 100,000 housing transactions, there is a net impact of almost £1bn.

In addition, more than 11,500 jobs are supported either directly or indirectly by these transactions.

The existing stamp duty holiday is indicative of the fact that the government recognises the positive contribution a liquid housing market can have on supporting the wider economic recovery, according to the report.

In fact, the Treasury last month claimed the move had already helped “protect hundreds of thousands of jobs, benefitting businesses across the housing supply chain and beyond”.

The report acknowledges that the factors which have underpinned the recent increase in housing market activity will not last indefinitely.

It points out that the economic mood is expected to turn more negative as the government’s furlough scheme is unwound from next year.

Meanwhile, the scheduled end of the stamp duty holiday, scaling back of the Help-to-Buy equity loan scheme, as well as with the introduction of higher taxes for overseas purchasers, could weigh on activity levels post-March.

What happens with Covid-19 will, of course, be the deciding factor, but given the clear multiplier effect moving house can have on the economy, keeping the housing market moving could play an important role in supporting any economic recovery, according to Stewart Baseley, executive chairman, HBF.

He commented: “With Help to Buy scheduled for full withdrawal in two years, now is the time for a proper discussion about the importance of freeing up the home mover market. Doing so will allow for more housing opportunities for all households, unlock greater labour mobility and provide the economy with a boost when it is most needed.

“The housing market and the new build sector in particular bounced back very strongly in spring after lockdown. Protocols are in place that have allowed high build levels and sales rates to be safely maintained, enabling thousands of households to buy the home of their dreams. Looking forward, house building and the wide range of jobs that the housing market supports, as well as the huge economic benefits that transactions generate can all play a major part in building and sustaining an economic recovery.”

Original Article from Property Industry Eye 19/11/2020

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Government confirms no extension to Help to Buy

Help to buy

The government has said changes to the Help to Buy due on 1 April 2021 will go ahead as planned and run until March 2023.

This new scheme will be for first-time buyers only and there will be regional caps in place for the value of homes.

Because of delays in the housing market caused by Covid-19, the government announced on 31 July there would be a two-month extension to the building completion deadline from 31 December 2020 to 28 February 2021. The legal completion deadline for the purchase remains 31 March 2021.

An extra measure was also introduced to protect existing customers who have experienced severe delays as a result of coronavirus.

Homes England, which administers Help to Buy, will work with those who had a reservation in place before 30 June to assess their situation and may provide an extension where necessary. In which case, they will have until 31 May 2021 to legally complete.

Secretary of state for housing, communities and local government Christopher Pincher MP says: “We believe these measures provide sufficient time for developers to build out homes delayed by Covid-19 and protect customers whose purchases have been significantly delayed. There are no plans to extend the current scheme further.”

Pincher confirmed this in response to a question from Andrea Leadsom MP who asked whether the Help to Buy scheme in its current format will be extended until April 2022.

Original Article from Mortgage Strategy 03/11/20

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Which is better, renting or owning a home?

To buy, or to rent, that is the question

Whether you’re going to rent, or if you’re planning to buy, your next move in Chelmsford is a personal choice. There are pros and cons for both, and some thinking will need to be done before making a decision.

But first, let’s look at a couple of statistics.

According to the government, just over 60 per cent of households in England owned their own homes (in the two years from 2016 to 2018). It has also been estimated that more than a quarter of people will rent their home by the end of 2021.

While many people want to own their own home in Chelmsford, for others renting is the best option for them.

It’s not just younger people who are renting either. A large proportion of renters are those who cannot yet find enough money for a deposit to get on the first rung of the property ladder, but there is also a growing number of older people who are renting as they downsize or move to be near family.

But what are the pros and cons of renting or buying?

What should you consider?

Here, we look at some of the things you should be thinking about.

Renting to keep costs down?

It could be said that renting doesn’t cost as much as buying because you don’t have to find a deposit for a house. This is indeed true – but not always! Monthly rents are sometimes cheaper than monthly mortgage payments but this is not always the case. You will need a deposit (which is protected by government-backed schemes), and you will usually need to pay a month’s rent upfront. This however, is still a lot lower than having to find upwards of a 15 per cent deposit to buy a house.

Renting may initially be cheaper, but you will not be on the property ladder and you won’t be investing in bricks and mortar and the potential profits that can accumulate as a property’s value rises.

What about maintenance costs?

This is often a tricky question to answer. Why? Because as someone who rents, your landlord will be expected to keep the property well maintained, and legally they have to make sure that the house is safe to live in, with regular electrical and gas safety checks.

But, as the person who rents, you will need to look after the property and there is an acceptance by many that it is up to you to keep the property in good condition. If you break items, the likelihood is that it is in your contract to replace like for like.

Of course, if you own the home, then all of the maintenance will come down to you and you will incur the costs – but on the plus side it is your home and you are investing in it.

Top Tip: Think about your finances and whether or not you can afford to keep your own property in tip-top condition.

It’s flexible

Renting is a way for you to live somewhere where you may not be able to afford to buy, or where work means you have to live. Renting can be a good option in this case because if you have to move often due to your work, you’re not going to want to go through the selling and buying of a property multiple times.

This is a real benefit to renting, but please be aware that if you are tied into a contract for a specific length of time, then you may not be able to get out of it easily.

Top Tip: If you can, specify the length of your rental contract. If you think you may only be somewhere for six months, make sure you are not tied in to a contract with a no break clause.

When it comes to renting or buying, it’s best to take the time to make a list of all the pros and cons. Circumstances may mean that you have to rent, but if you look at the figures, you might think it better to get on the property ladder.

You will need to do all the financial calculations based on your circumstances to get the answer to these particular equations, but we at Essex Homes And Lettings can offer you our professional advice to help you make an informed decision.

Give us a call on 01245398466 for more advice. We might even have a house for sale that is perfect for you!

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Essex Homes And Lettings and our responsibilities to you during COVID-19

At Essex Homes And Lettings we take the health and safety of our staff and clients extremely seriously. We are staying up to date with, and taking advice from the Government, Public Health England and the Chief Medical Officer as the COVID-19 situation progresses.

Given the current level of concern, we want to reassure all our clients that we have taken and will continue to take the appropriate and necessary steps to ensure our levels of service and quality are maintained, without risk to staff and clients and without loss of service whilst adhering to recommendations.

We will continue to monitor the situation on a daily basis and we will provide updates accordingly.

We have already taken the following steps and are confident that we can and will operate with minimal disruption through the next phases of the coronavirus outbreak whilst meeting the needs and requirements of our clients and the wider public.

Office

As per current guidance, we have asked that most of our team members work from home. We have a limited number of staff working from our office, but we request that you do not attend our office unless it is absolutely essential. Please also do not attend without prior arrangement. 

We will be avoiding handshakes and asking anyone who visits our office to wash or sanitise their hands.

Staff still situated in our offices understand their responsibility to report immediately any change in their health, family health or circumstances.

We have provided hand gel on all staff desks and do not allow staff to share phones or equipment.

All door handles, phones, keyboards and other office equipment is cleaned regularly.

Clients

Where possible we are offering the following:

  • 360-degree viewings
  • Video call viewings
  • Recorded video viewings

All of our communication channels – telephone, email, text messages, messenger and social media are all operating as normal and all staff members are contactable. 

Buyer and Seller Information

We have introduced new procedures and guidelines in the event of viewing requests. These will be reviewed as the situation evolves but our foremost concern is to keep staff and clients safe. Please talk to our staff on 01245398466 or email sales@essexhomesandlettings.co.uk with regard to this.

We are here to help and support all of our clients and we hope you, your friends and family remain safe and healthy for the duration of COVID-19.

Thank you for your patience, support and understanding during this challenging time.

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How to Save Money for a Deposit When Renting

Banking on a deposit, tips to save for your perfect pad in Chelmsford!

Looking to buy your own place in Chelmsford and move out of rented accommodation? What a great thing to be doing, to get on the property ladder is a wonderful sense of achievement and a milestone to be proud of.

So you’ve sat down and worked out you want to move, and you may even have found your ideal location in the Chelmsford area, perhaps even seen your dream pad. Four beds? Nice garden? Garage? Room to grow your plants or even grow your family? Brilliant.

Unfortunately, at this point, some people stop right there though when they realise they’ll have to put a deposit down, as they say, they’ll never be able to afford it.

But you’re not one of them! It sounds like you’re one of those who are up for a challenge, and know you want to save for that deposit and buy your perfect place in Chelmsford.

There are a number of schemes available to help people, but a general rule of thumb is that you’ll need around a 15 per cent deposit.

That can mean a large sum of money saved in the bank before you even start to make an offer for your new home.

It can seem to be an uphill struggle, but if you’re prepared to work hard to save up for a deposit, that dream can become a reality.

So, what can you do?

7 Ways to Save Money for a Deposit

1. First off, speak to a professional mortgage advisor and work out how much you need to save and over what period. If you don’t know what you need, how will you know what to put to one side?

2. If you’re currently renting, can you move into a place where the rent is cheaper and put aside what you have saved into your deposit fund? Yes, it might mean not living exactly where you want, but it’s your dream to own a property in Chelmsford after all.

3. Along similar lines, have you thought about moving back home with relatives? Sure, it may seem like you’re going backwards and could lead to tantrums and tears, but think of the money you will be saving!

4. If you’re paying for a car, do you really need it? Can you buy a smaller one or get rid of a car altogether? Yes, you’d have to think of other means or transport to get about for a while, but think of the bigger picture.

5. Switch your energy bills – this sounds small fry, but it’s advice from the Which? organisation and it shows how much you can be saving. Which? also says you should check your council tax bill – are you paying too much or should you have a discount? That money is better in your savings pot.

6. Are you spending too much on clothes? Cosmetics? An expensive gym? Eating out? Again, these may be lovely things, but you’re on a mission to save so cutting out or slimming down your day-to-day living expenses can make a huge difference. We bet you’ll soon see how frivolous a lot of your spending is!

Think about it. Say you’re paying £50 a month for a gym membership, can you workout at home instead using YouTube for example? That’s a £600 saving already. Put that in a savings account with the rest and it all adds up.

7. How much is a nice coffee, and how many times do you have one during the week? Sounds daft, but if you’re having a ‘double frothy chocolate top latte’ two or three times a week, you’re drinking your savings away. Treat yourself for sure, but keep an eye on the spending.

Top Tip: If you are using a bank with an app you can manage and monitor what you’re saving or spending. So, now you’ve started to save money – and put it away in your pot – you should think about earning a few extra pounds too.

3 Ways to Make Money for a Deposit

1. Have you thought about freelancing or tutoring in your spare time? If you have a skill or can offer help to someone, this can become a lucrative second income.

2. What about selling some of the things you’ve collected over the years and are sitting gathering dust on a shelf? There are so many apps you could be using to help you manage online sales of items such as books and clothes.

3. It’s cheeky, but don’t forget to ask your boss for a pay rise! If you don’t ask, you won’t know the answer. Think about how to broach the subject and make sure you explain why you think you deserve a raise. You should show your boss how your work and commitment will benefit the business rather than making it all about yourself!

The Bank of Mum and Dad!

If you’re saving and being careful but still not getting near your total, there is the potential to use the Bank of Mum and Dad. We know that this isn’t available to everyone, but it’s worth the chat to see if a relative can assist you. With this option though, check out the legal rights and responsibilities as it may not all be straightforward.

The team at Essex Homes And Lettings are always available to offer advice so please don’t hesitate to call us on 01245398466 or email us at sales@essexhomesandlettings.co.uk. We will be delighted to offer our words of wisdom on all things property.