Your first time? Buying a house of course...

"I remember my first time…" Granddad began. I nearly choked on Granny's rock cake. Mercifully it transpired that Granddad was recollecting the purchase of his first house and not anything more salacious (such as his little-known but critically-acclaimed Hip Hop career in which he pioneered using his lyrical flow to give financial advice). Really though my Granddad is a very interesting type: the stories of his adolescent rap battles and dance-offs in tube stations during the Blitz are the stuff of legend.

Anyway; I was talking to him the other day about my friends, because of his unique dual insight into the worlds of finance and Hip Hop. They had just bought their first house and had heard that Tinchy Stryder had been giving savings tips to schoolchildren. This led them to the perfectly illogical assumption that financial advice from any Hip Hop star was going to be sound. However, this was not to be the case - Dappy from N-Dubz gave them some pretty shocking mortgage advice (this isn't an isolated incident of Hip Hop stars giving bad advice: Granddad remembers receiving some pretty questionable stock market tips from Vanilla Ice in the late eighties, amongst other horror stories).

The moral is: Hip Hop is great, but don't rely on it when it comes to making financial decisions, particularly when buying your first home. So flip the script; fix up, look sharp; and check out these tips - they are off the hook!

•   Deposit. Unless you have been living under one of Dappy's crazy cone-shaped hats for the last couple of years, you'll know that there's been a credit crunch going on. The result is that in order to get a mortgage, you will need a significant deposit (typically at least 10% of the purchase price). Lenders offer lower interest rates to those who have bigger deposits, with the most kickin' (Hip Hop translation = appealing) rates for those with a 40% deposit. It is likely, therefore, that this sum will take a good while to amass (unless you can realise that lifelong dream to break into Hip Hop. My granddad almost earned the deposit for his house with royalties from his Hip Hop cover of Vera Lynn's "We'll meet again". Unfortunately the record label rejected it for inclusion in the album, "Songs that won the war". Needless to say it was a dark period in his life.). Savings rates have taken a nosedive recently, but there are still good deals available if you are prepared to commit your money. If you are not looking to buy for a couple of years (and therefore not needing access to your money), why not look at a Fixed Rate Bond to make sure that your money is working as it can to get you to your goal.

•   Credit history. A mortgage is like any loan, you will be credit searched and scored. So if you have any blemishes on your credit file, it's best to get these dealt with before applying for your first mortgage. Getting onto the electoral roll will also help, if you are not already on it, as this helps to confirm your address.

•   Budget. Take time to analyse your budget, fully breaking down what you spend and on what. If you are going to forego something, or make a sacrifice to free up more money for your mortgage, be realistic. Don't say you will give up smoking; not go down the pub or give up your Hip Hop dance classes if, in your heart of hearts, you know you might not be able to do it! Work out how much you can comfortably afford to pay each month. If you are going to take out a variable rate mortgage (which can be attractive because of the current low rates and fees involved when compared to a fixed rate), make sure you factor a buffer into your budget just in case rates go up.

•   Fees, fees, fees. So you've saved your deposit, but who'd have thought buying a house would incur you so many fees - so make like the boy scout and be prepared. Here's a rundown of fees that you can expect to pay (remember this list isn't exhaustive and fees can vary wildly, so shop around for everything to keep your costs to a minimum).




• Mortgage set-up fees. The majority of mortgages will require you to pay an Arrangement or Booking fee of some description, or even a combination of the two. Usually you can expect to pay higher fees with a Fixed Rate mortgage. Booking fees tend to be a little lower than Arrangement fees, but normally have to be paid upfront. Arrangement fees tend to be a little higher but normally can be added to the mortgage balance if you cannot afford, or do not want to pay them upfront. Be sure to check Section 8 of the Key Facts Illustration your mortgage lender has to give you to see whether any fees are refundable if your application doesn't complete.


• Valuation Fees. Another fee that your mortgage lender will charge is a valuation fee. This is to pay for a surveyor to go round and value your chosen property for the lender. Beware though: a Mortgage Valuation doesn't investigate the property too thoroughly. For this you will need a Homebuyer's or Full Structural Survey. These investigate the property in more depth and should uncover things like dry rot or Hip Hop infestation. Some lenders will offer you a free valuation as part of the package. This kind offer (how kind they are being by offering to pay for their own valuation is open to question!) will most likely not extend to Homebuyers or Full Structural Surveys, so if this is the type of valuation you think you might want, be prepared to pay, even on mortgages boasting free valuation deals.


• Solicitors Fees. To undertake the legal work on your behalf you will need to employ a solicitor or conveyancer. Costs can range an awful lot, so make sure you get a quote from a number of companies. Sometimes fees might be linked to the value of the property you are buying or based on whether it is a freehold or leasehold (leasehold tends to be more expensive as there is more work involved).


• Broker Fees. An independent mortgage broker can be a very useful ally in securing the best deal available. In exchange for this service your broker may take commission from the lender, but more likely will charge you a fee.


• Stamp Duty. The Government recently announced the great news of a temporary exemption of Stamp Duty for first time buyers for properties valued up to £250,000. Watch out though, if you buy a property valued even only slightly over this amount, you will need to find at least 3% of the value to pay the Stamp Duty.

•   House-buying can be a stressful process; so you want things to go as smoothly as possible. In reality much of the process is in the hands of others, but there are a few things you can do to grease the wheels. For example, it is likely that your chosen mortgage lender will want to see documentation to prove your income and identity. Therefore, have all of your payslips, bank statements etc in an easy-to-find place. Your solicitor may want some money "on account" or paid upfront, to cover any immediate costs they incur, such as doing searches. Having these little things ready can save you time later on

•   Insurance. Take a practical view on insurance. Don't blindly say yes or no to everything that you are offered (and you will be offered!). Think carefully about what you need, and what your dependents might need. If, for instance, you are buying a house by yourself, you may not need life insurance (although this will depend on your personal circumstances). However, you might need some Mortgage Payment Protection Insurance to make sure your income is covered, in case you lose it and find yourself unable to pay the mortgage. It is always best to at least discuss what your possible insurance needs might be with an Independent Financial Adviser.

There we are then - some food for thought. Now you just need to go and compare mortgage rates! My thanks must go to Granddad for his help with this tip, which reminds me… He might be old skool like Happy Shopper, but who'd have thought that Granddad's Hip Hop dream would finally come true? After his previous rejection by Vera Lynn's record label, he has now been allowed to release his Gangsta cover of "White Cliffs of Dover". This song is available on iTunes, and also in the shops, as part of the album: "Songs that lost us the North Atlantic Cod Wars".