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 There are many reasons why we choose a particular house to be our new home. Some are practical, but in truth it is the emotional ones that have an overriding influence:
- A new job requires a move to a new area
- Your relations, or your partner's relations, live in a particular area
- One area has better job prospects than another
- You need to move to cope with a growing family
- You want to "trade up" (or "trade down") to a different house, or area
- You want to retire
- You want a change
To avoid early disappointment it is ESSENTIAL that you work out your priorities, and hence the type of properties to shortlist, BEFORE you start looking. Take a random sample and you may end up emotionally committed to a house that is entirely wrong from a mortgage point of view.
For maximum cost-effectiveness you should adopt two key guiding principles:
- BUY AS BIG AS YOU CAN AFFORD
- PAY AS LITTLE AS YOU CAN FOR IT
DON'T buy a house with the intention of adding on extensions, loft conversions and all the rest because almost certainly you will end up over-capitalising the property (ie) spending more on it than you will get back in increased value. Classic examples of expenditure that rapidly over-capitalise a house are:
- double glazing
- stone cladding (often thought to REDUCE the value of a property!)
- extensive garden works
- swimming pools
- conservatories and hobby rooms
- completely new fitted kitchens
Examples of improvements that CAN improve a property's value in rough balance with the actual expenditure are:
- improved insulation (with the exception of the aforementioned double glazing)
- extra bedrooms, particularly with en-suite bathrooms
- redecoration
- central heating
This all assumes that the work is carried out in an area where there is potential for the property value to rise. A five-bedroomed luxury abode next to an inner city council flat tower block will still have limited buyer appeal.
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