Step by step guide to buying your first home
Wed 15 Jun 2016
Decide if buying is right for you
To buy or not to buy- that is the question. 86% of people in the UK want to own their own home. Buying a home enables you to put down roots and take ownership of a property to live as you please. But it is a big responsibility and you don’t want to bite off more than you can chew and end up with nothing but regret.
Buying a home is a huge financial commitment; be sensible about what you can afford and don’t rush into buying. Ask yourself if buying makes more emotional and financial sense than renting. If in doubt, stick to renting until you are in a more realistic position to buy.
Do your homework- what can you afford?
As a general rule, you should be looking at houses that are 2-3 times your annual income to ensure you can make your mortgage repayments.
Additionally, be realistic about what you can afford. Make a list of essentials you require for your home and try and separate these from the ‘extras’ that would serve as an added bonus. When looking for your first home, it may be necessary to make compromises to stick within your budget.
Save for a deposit
Saving for a deposit is usually the hardest part of the buying process. The more you save for a deposit- the equity you put towards the cost of your home- the better mortgage rates you will be offered and the lower your monthly mortgage repayments will be.
Ideally you should save around 5-20% of the cost of your home. For example, if you’re looking at houses worth £150,000, you would need to save a minimum of £7500. You would then need to borrow the remaining costs from a lender, in this case £142,500. But saving as much as 25% will allow you to access the best mortgage rates.
Find the right mortgage for you
Now you’ve got your numbers, you can start looking for mortgage lenders. You have multiple options to choose from; mortgage brokers, individual banks or searching online. It is important that you research all of your options in depth.
Once you find the best mortgage for your circumstances, the lender will give you an agreement in principle.
Additional costs
Don’t forget to save for additional costs that come with buying your first home.
There are other costs aside from your monthly repayments that need to be taken into account. These include stamp duty, mortgage arrangement and valuation fees, solicitor’s fees, survey costs, buildings insurance, and furnishing and redecorating costs.
Finding a house and putting in an offer
Firstly, take a look at our blog to avoid the most common pitfalls when house hunting. When looking for a property consider what you want from your home: how many bedrooms? Do you need parking or a garden? Then pick an area to focus your search.
Scan local newspapers and online. Once you’ve found a property call the agent to book a viewing.
You’re unlikely to find something straight away, but don’t be disheartened; looking for a home takes time. You don’t want to rush what is probably the biggest purchase of your life.
But once you have found your dream home, it’s time to make an offer. This will usually be done through your estate agent.
Do some research on what similar properties in the local area sold for- this will stop you paying more or less that you should.
Once the offer has been accepted by the seller, the buying process can go ahead.
Find a solicitor
You will probably need to hire a solicitor or conveyancer to handle the paperwork and all legal aspects of the sale. They will also check for any local issues that could affect the value of the property.
Arrange a survey
Once your offer has been accepted, it’s important to arrange a survey to assess the quality and structural stability of the property. Any defects could affect the property’s value.
The most comprehensive- and expensive- is a full structural survey, which is particularly worth doing if the property is old, remodelled or in need of work. It is also a good idea if you’re planning to extend or alter the structure of the building.
The most basic is a Condition Report, which provides a traffic lights system for the state of the property- green means everything is in good condition, orange means there is some cause for concern and red means there are serious problems that need to be addressed.
The middle ground is a HomeBuyers Report, which is far more detailed and includes a valuation, however this type of survey is non-intrusive so any underlying problems may be missed.
Exchange contracts
After your solicitor or conveyancer has completed all necessary checks, you will need to sign a contract legally committing you to the purchase. It is at this point that you will pay your deposit and agree a date to complete the sale.
Final steps
Once you’ve signed the contract and arranged a moving date, you need to organise getting your belongings to your new home. This could be hiring a moving van and doing it yourself, or hiring professional removal men.
You will also need to get buildings insurance in place for the date of completion. This ensures your home is protected in case of damage and is normally a condition of most mortgages.