Buying a home: Mortgage advisor's top tips for those in the market

The Bank of England has raised interest rates in a record 14th increase in a row in an effort to get inflation back on track towards its 2% target.

The Bank’s Monetary Policy Committee (MPC) bumped up the base rate by 0.25 percentage points on Thursday to 5.25%.

This is the highest level in 15 years and comes after warnings the successive hikes could see mortgage holders lose significant chunks of their disposable income.

Lynsey McMenemy, director at Hansar Mortgages, gave STV News her top five pieces of advice for those hunting for a new home.

1. Mortgage in principle

“Have your agreement in principle ready,” Ms McMenemy said.

“That puts you in a much stronger position when you’re offering because you have your finance ready to go.”

AiP stands for agreement in principle, some lenders call it a mortgage in principle.

It’s an indication that your bank or mortgage broker could lend you a specified amount, based on details you’ve provided about your income, spending and debts.

2. Be selling or get first-time buyer support

“Second thing would be ideally to have either sold or be on the market,” Ms McMenemy said.

Being a cash buyer can put you in a strong position when negotiating because you can make an offer without being tied into a chain.

Having your home on the market makes it easier for you to move on making a deal for your next one.

If you find your dream property and haven’t already got yours listed, you could miss out.

If you’re a first-time buyer, there are a host of government schemes to help you get on the ladder.

You can find out more about them here.

3. Research the area

“My third thing would be to do your research,” Ms McMenemy said.

“Speak with your solicitor, look at all the portals, look at all the sold prices and be ready to go either prior to closing date or at the closing date with your selected offer.”

Average house prices in Scotland have continued to rise over the last year despite predictions that interest rates would cause them to fall.

DJ Alexander Ltd, the largest estate and letting agents in Scotland and part of the Lomond Group, said that average house prices in Scotland have risen by 1.57% between June 2022 and May 2023 (the latest period for which there is data) and recorded substantial variations across the country.

4. Register with estate agents

“My fourth step would be to register with all these agents and all the portals to get access to the properties that are coming on the market,” Ms McMenemy said.

There have been enormous regional variations in house prices across Scotland with East Lothian having the highest price increase of 16.31% over the year; Inverclyde was up 4.96%; and North Lanarkshire rose 1.66%.

Once you know the area you’re interested in you should register with local estate agents.

Registering is free and doesn’t create any obligation with them but could help you find your perfect home because agents sometimes reach out before listing properties online.

5. Know the cost

“My fifth tip would be have all your figures noted,” Ms McMenemy said.

“So you know exactly what the mortgage payments are going to be with your stamp duty, the legal fees, everything ready to go prior to you have an and often accepted.”

You can see how much monthly payments will be based on different interest rates, loan amounts and mortgage terms using an online calculator – many banks and consumer sites have them.

Legal fees are typically between £500 to £1,500 plus VAT, according to leading Scottish estate agents Pacitti Jones.

Stamp duty in Scotland is called land and buildings transaction tax (LBTT).

First-time buyers pay no LBTT on the first £175,000 spent on a property in Scotland.

Use the LBTT calculator on Revenue Scotland’s website to work out how much tax you may need to pay on a property.

If you need movers, remember the cost will vary on a number of factors including how many belongings you have and the distance to your new home.